Countries working towards ending oil exploration

3 July 2018 (Last Updated January 31st, 2020 07:57)

In May, New Zealand announced plans to ban the award of new oil and gas exploration licences in an effort to combat climate change and promote the development of green energy sources. Offshore-technology looks at measures currently being taken by countries around the world to curb the pursuit of fossil fuels.

Countries working towards ending oil exploration

New Zealand

The New Zealand Government unveiled its intention to ban the award of new oil and gas development permits in May 2018 as part of an effort to tackle climate change.

The proposal is in line with current New Zealand Prime Minister Jacinda Ardern’s election campaign promise to reduce the country’s net greenhouse emissions to zero by 2050, citing the plan as ‘another step on our transition away from fossil fuels and towards a carbon-neutral economy’.

New Zealand possesses the world’s fourth-largest maritime exclusive economic zone and its oil and gas industry comprises a total of 31 exploration permits, including 22 offshore. The industry brings in roughly NZ$2.5bn (£1.3bn) per year for the country, approximately 1% of the national economy, and employs around 11,000 personnel.

The majority of the sector is based in the North Island’s Taranaki region, which is expected to be the most affected by the ban. In addition, there is also the potential for extensive exploration off the shore of the South Island, including the Barque Prospect that is estimated to contain around five trillion cubic metres of oil and gas.

According to the New Zealand Ministry of Business, Innovation and Employment (MBIE), domestic transport accounts for 82% of the demand for oil products and the country relies on imports to meet around two-thirds of its petroleum needs.

Cameron Madgwick, chief executive of the country’s oil and gas body Pepanz, warned that the move could cost New Zealand ‘billions’ of dollars in lost revenues, noting that interest in the country’s petrochemical sector had recently started to recover prior to the announcement.

France

In September 2017, the French Parliament announced plans to introduce legislation to phase out all oil and gas production by 2040, coinciding with the country’s scheduled ban on the sale of gasoline and diesel vehicles.

The initiative has been described as the first of its kind in the world, and will prohibit both the award of new exploration permits and the renewal of existing ones across all French territories. However, the country will continue to import and process oil produced overseas under the current plans.

The legislation supports the environmentally conscious Macron government’s effort to embrace renewable energy and make France a carbon-neutral country by 2050. The country’s officials have stated they hope other nations will follow this example.

“The country will be the first big industrial country to dare to take this commitment unilaterally.”

Commenting on the development, France’s Ecology Minister Nicolas Hulot said the country will be ‘the first big industrial country to dare to take this commitment unilaterally’.

The decision is largely a symbolic one, as France’s petroleum output is relatively minor compared to many countries; domestically produced hydrocarbons typically represent just 1% of the country’s total consumption.

The US Energy Information Administration notes that France only produced around 16,000 barrels of petroleum a day in 2016, compared to key producer Saudi Arabia, which had a total output of 10.4 million barrels per day during the same period.

France also plans to stop generating electricity from coal by 2022, as well as reduce nuclear power activities from the current energy share of more than 75% to 50% within the same timeframe. To fill the gap, the country intends to focus on generating energy from renewable sources.

Denmark

Denmark’s Energy, Utilities and Climate Minister Lars Christian Lilleholt announced in February 2018 that the government would be ceasing to grant permits for the exploration and drilling of oil, natural gas and shale gas following more than 80 years of activity.

The initiative currently only relates to the country’s inland waters, meaning that North Sea developments will remain unaffected by the move. Denmark is aiming for a ‘Green Energy Transition’ by 2050, which would see the country powered entirely by renewable sources of electricity such as wind.

Denmark has been oil self-sufficient since 1993, and a net exporter of oil and natural gas since 1997. The country is forecast to remain a net exporter until the 2020s, despite declining production rates. The country is the third largest producer in Western Europe, behind Norway and the UK respectively.

In 2015, more than 55 platforms were conducting production activities across 19 oil and gas fields within the Danish portion of the North Sea. Mærsk Olie og Gas is the operator in charge of production from 15 fields, while DONG operates three facilities and Hess is responsible for the remaining site.

With the entirety of Danish hydrocarbons currently being produced in the North Sea, only two areas of Denmark have oil and gas potential located on land or in inland waters. The first area is situated in South Denmark, where the potential is estimated to be limited and uncertain. The second area is in North Jutland, where production would be unlikely to provide significant benefits to the local region.

Belize

Belize’s legislature unanimously approved a bill to ban all future offshore developments within the country’s territories in December 2017.

The move has been primarily implemented to protect the 190-mile-long Belize Barrier Reef, which is the largest of its kind in the Americas, the second-largest worldwide after Australia, and recognised as a UNESCO World Heritage site.

The coral reef is an important tourist attraction and is home to around 1,400 species of wildlife, including manatees, rays, endangered hawksbill turtles, and six different threatened species of shark.

The initiative represents the first time a developing nation has taken such a major step to protect its oceans from oil development and extraction. This was influenced by a significant public campaign to curb marine exploration in the country that saw participation from high-profile international environmental organisations.

Belize’s tourism industry is estimated to generate around $200m a year for the country, which is approximately three times the current value of its modest oil production of roughly 3,000 barrels a day.

The latest action follows a previous ban on offshore exploration within the country, which was initiated by the Belize Supreme Court in 2013 due to safety and environmental issues after the Deepwater Horizon spill raised concerns about the potential environmental harm from exploration.

However, this initial ban was later suspended and revised plans were announced in June 2015, which would have permitted offshore drilling with certain caveats such as the implementation of a comprehensive oil spill response plan.

These proposals proved unpopular within the country and were met with widespread opposition before being dropped in late-2015.

Costa Rica

In July 2014, Costa Rican President Luis Guillermo Solís extended the country’s ban on petroleum exploration and extraction up to 2021, in addition to issuing new guidelines for energy efficiency across governmental agencies.

The move extends a moratorium that was originally signed by former president Laura Chinchilla in 2011, which made the country’s Environment Ministry (MINAE) responsible for enforcing the rule. The initial moratorium was due to expire in August 2014 before it was renewed.

The original law cited Costa Rican citizens’ constitutional right to a healthy living environment as its justification for the ban. The moratorium also called for a new cost-benefit analysis of allowing petroleum extraction in the country as a result of risks evident in the BP Deepwater Horizon disaster in the Gulf of Mexico in 2010.

“The tide has turned on fossil fuels, and there is widespread political support now for a just transition to renewable power.”

Minister of Environment and Energy Edgar Gutiérrez stated that the ministry will also now be tasked with overseeing a prohibition on government purchases of equipment, lights and appliances that consume high amounts of electricity.

Although Costa Rica does not extract oil, the International Energy Agency (IEA) notes that the country still burns the fossil fuel for electricity. The country generated approximately 8.8% of its power from oil during 2011, while the Costa Rican Electricity Institute (ICE) said that around 98.1% of the country’s electricity came from green sources in 2016, down slightly from 98.9% in 2015.

The country’s current sources of renewable energy include large hydropower facilities, which are fed by numerous rivers and heavy seasonal rains. Costa Rica’s energy infrastructure also includes geothermal and biomass plants, wind turbines and solar panels.

Although the majority of Costa Rica’s energy is generated using renewable sources, the country is still reliant on hydrocarbons to make up the deficit, particularly late into the dry season when hydroelectricity production rates are comparatively low.

Ireland

Ireland’s lower house of parliament, Dáil Éireann, voted 78-48 in support of legislation to stop the Irish Government from providing new contracts for on-shore and offshore oil and gas exploration activities in February 2018.

The ‘Climate Emergency Measures Bill’ was introduced by Brid Smith, deputy of the left-wing Solidarity-People Before Profit alliance, and primarily outlines how fossil fuels are major contributors to climate change. Smith argued that further exploration should be banned to reduce damage to the environment.

The bill is also intended to ensure that the impact on the environment is given sufficient consideration when awarding licences, undertakings and leases under the Petroleum and Other Minerals Development Act 1960.

Factors such as the annual average global temperature and monthly average level of CO2 in the atmosphere would be scrutinised before any developments are approved under the proposed new rules.

Commenting on the result, Green Party Leader Eamon Ryan TD said: “This is truly a historic day for environmentalism in Ireland.

“The tide has turned on fossil fuels, and there is widespread political support now for a just transition to renewable power.”

The bill is now expected to proceed to the parliamentary committee stage, despite strong opposition from the Irish Government. The legislation’s implementation would make Ireland the fourth country in the world to impose an explicit ban on fossil fuel exploration.