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Study of economic impact of hydraulic fracturing released

Study of economic impact of hydraulic fracturing released

14 December 2012

The practice of hydraulic fracturing has the potential to deliver almost $800 million in annual GDP and over 7,000 jobs under a growth scenario, or fail to deliver $215 million in GDP and up to 2,000 jobs if a moratorium is imposed, a new report has found.

The report, Unlocking the potential: an economic impact of hydraulic fracturing of oil and gas wells in New Zealand has been developed by Venture Taranaki, Taranaki’s regional development agency, in conjunction with Wellington-based BERL.

“To date discussions around hydraulic fracturing have focused on the environmental and health and safety impacts,” says Venture Taranaki Chief Executive Stuart Trundle.

“This report seeks to inform discussions about the future of the process in New Zealand with rigorous economic analysis.”

It looks at the economic outcomes of three scenarios for the practice – a moratorium, a business as usual scenario, and an expansion into emerging areas of oil and gas exploration and production.

“These are three plausible futures for the practice in New Zealand, and each scenario has implications for production and consequently revenue, royalties, GDP, exports, expenditure and employment.”

When compared to the impacts of a moratorium, a business as usual scenario – maintaining the current level of the practice – will result in an additional 773PJ of gas, 277PJ of oil, and return $10.5 billion in revenue, $5.1 billion in exports and $1 billion - $1.6 billion in royalties to the Government over the next decade.

On an annual basis, this would result in an additional $215 million in GDP each year, and an annual average of 1,986 jobs nationwide (the average number employed per year, though total numbers will fluctuate annually over the ten-year period).

If a growth model is permitted, compared to a moratorium hydraulic fracturing could contribute $29.4 billion in revenue, $23.7 billion in exports and up to $4.4 billion in royalties over the next decade.

Further, this scenario could deliver $799 million in total GDP and an average of 7,386 jobs annually.

“Taranaki has hosted the oil and gas industry for over 150 years. Our communities understand the risks and the rewards that this industry can deliver,” says Stuart.

“We also understand how these rewards can align with national goals of economic transformation. In an industry where a single well strike can add $1 billion onto the nation’s balance sheet, the value in optimising the productivity of existing wells cannot be underestimated.”

The report finds that 65 percent of the benefits of a growth scenario would be delivered outside Taranaki, distributing the region’s fortunes to other parts of the country.

“New Zealand’s economic future will be underpinned by its natural resources, but it is critical that in addition to managing the risks we actively seek to maximise the rewards. In doing so we will produce the best possible outcome for current and future generations.”

“Whatever our nation’s future holds for the practice of hydraulic fracturing, it is critical that we take a view that balances risk and reward,” Stuart says.

“This report informs the national debate and quantifies for the first time the economic benefits that new technologies can deliver in helping to unlock the wealth beneath our feet, within a carefully managed risk profile.”

“In doing so New Zealand will move closer to fully and safely optimising our natural resources, which will benefit not just current but future generations of New Zealanders.”

The full report can be downloaded from:


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