Sustainability Science: Economic and Environmental Impact of NZ Oil

This report examines the sustainability issues surrounding oil and gas exploration and extraction in New Zealand, where economic development and environmental concerns often clash. It highlights the historical context of the industry, its economic importance, and the increasing environmental pressures due to extensive exploration activities. A key problem identified is leakages from closed wells, which pose risks to aquatic life due to the release of toxic materials, often resulting from rapid drilling or use of substandard materials. To address these issues, the report suggests that the government should enforce stricter safety regulations, companies should prioritize high-quality materials and advanced technologies, and embrace corporate social responsibility (CSR) through effective planning and collaboration with reputable construction firms. The report concludes that balancing economic benefits with environmental stewardship is crucial for the long-term sustainability of New Zealand's oil and gas industry.

SUSTAINABILITY
SCIENCE

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Contents
INTRODUCTION.................................................................................................................................1
Issues that arise..................................................................................................................................2
Specific problem that need to be resolved.........................................................................................3
Options for resolving the problem.....................................................................................................3
Recommendations.............................................................................................................................4
CONCLUSION.....................................................................................................................................4
REFERENCES......................................................................................................................................4

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INTRODUCTION
Economic issues and environmental concerns are running parallel with each other in most
parts of the world. In the country like New Zealand these issues are becoming more complex.
In spite of having a healthy economy, due to environmental issues and the international
pressure they have to change the process of working within the organisation (Rankin,
Windsor and Wahyuni, 2011). Oil and gas exploration is becoming one of the major
contributors in the nation’s economy is recent years and it is expected to increase at much
faster rate. In such an environment, the economic policies need to be designed as per the
requirements of the firm.
The background of the problems is explained in the sense that due to over exploitation of oil
and gas from the territorial regions within the New Zealand. In 1955 when BP established
their first extraction plant at New Zealand’s basin in collaboration with Shell it was the start
of this industry inside the country. The natural gas industry was further established in the year
1970. In present times there are many small and big basins that are capable of meeting the
demands of the New Zealand’s population. The increasing demand of the oil and gas within
the country is very sharp and even the 350 exploration wells drilled to date is not enough to
meet the requirements (Byrd and Leardini, 2011). Such a high amount of exploration and
extraction activities in the region have put pressure on the environment especially the flora
and fauna lives in the region. Australian Sub-Continent has been one of the major regions
where flora and fauna has been flourishing like the Great Barrier Reef has been habitat to so
many people. In present times, New Zealand stands 14th in the World in terms of
attractiveness to oil and gas investment (Ministry for the environment, 2018).
The examples like the BP oil spills may result in loss to life as well as economic property.
With the increasing competition, high investments in safety have been put on secondary
matters. The international community’s pressure on the Companies to invest more on the
safety concerns. This will have a significant impact on the economy of New Zealand. This
can be seen by the fact that gas prices in the past three year have been rise by 200%. Peak oil
concerns and the shell’ withdrawal from the Australian region has given the small exploration
companies to come up (Kucukvar and Tatari, 2013). The higher cost for the technology and
equipment has always been a concern for any nation. This is due to the fact that government

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of New Zealand have to rethink about their policies so that cost of exploration and
environmental concerns are handled properly.
In this report the exploration and extraction of oil related issues in New Zealand’s
environment has been elaborated. In the later section of the report, the recommendations
related to the issue can be handled.
Issues that arise
There are many companies that are coming to the oil and gas explorations. Such an
exploration helps any country to find new sources of income in the country (Tonelli, Evans
and Taticchi, 2013). This is helpful in making the condition of the economy better but it
enhances the problems related to environment concerns. The parallel balance in the economic
and environmental concerns can be difficult. This is due to the fact that economic demand of
the nation suggests increasing the number of explored wells so as to meet the demands in the
market. On the hand the environmental concerns suggests to improve the ways of extraction
of oils by enhancing the technology and equipment in use. There is huge amount of
innovations going on in the oil and gas industry which also needs huge amount of
investments (Cohen, Joutz and Loungani, 2011). Since the wells are getting deeper and new
layers have been discovered in different parts of the New Zealand’s coastal region. This has
made the cost of drilling to be very high and new technologies have to be incorporated. This
has a direct impact on the oil and gas prices. Every country in the modern day business
environment wants to be self-reliant in the energy sector hence the planning towards
expanding the number of wells has to be made very early.
But such economic empowering raises the questions related to the environment. The over
extraction of resources may raise the questions of sustainability. In the coming years when
the international fuel prices are going to increase New Zealand will have to be self-sufficient
towards the production of the oil and gases. Gulf countries estimate their oil reserves to get
empty by 2025-30 and hence New Zealand needs to explore new sources of oil and gas
supply for their commercial practices (Ross, 2012). This problem needs to be looked from the
base so that it does not become big in the coming future. Public-private partnership need to
be boosted up so as to ensure that national interest and the future demands of the regional
market can be fulfilled.

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Specific problem that need to be resolved
In oil and gas industry there is huge amount of problems that gets arise in their day to day
operation. More specifically the problem of leakages in the closed wells has been a greater
problem for the companies. It is seen that the wells that are closed after the use or say after
the complete extraction of oils, the holes due to improper covering yields some of the toxic
materials (Mengerink, et. al., 2014). These toxic materials causes huge amount of problems
for the aquatic life. The perfect situation of it was the BP oil spill in the coastal region of the
American Sub-continent. Even till todays there is some leakage from the hole.
These petrochemicals or hydro-carbons are dangerous for the lives that live near such
trenches. Such situations also arise in the case of drilling where cracks gets generated due to
small leakage or holes in the pipes or wells. There are many factors that possibly lead to such
situations. It is found that major two reasons for this is fast drilling or use of low quality
technology or equipment in the extraction (Lukawski, et. al., 2014). This can be understood
by the fact that fast drilling is done so as to increase the production of oils and gases. In such
fast process often mistakes happens. Other major reason for this is the use of low quality
materials like the use of poor quality cements for filling or blocking the holes after the use.
Poor use of technology so as to understand the condition and architecture of the place can one
of the major reasons in this regards.
Options for resolving the problem
Even when there is no such incidents like BP oil spill happened till today in this region but
still there have been consistent demand for taking the effective majors so as to avoid such
incidents in future. There are various ways using which such kind of problems could be
resolved (Allen and Allen, 2013). One of the most essential things that the Government of
New Zealand can do is to make policies regarding the safety measures taken by the
companies while drilling and closing of wells. The first and foremost thing that a company
needs to do is to give priority to the safety measures. From the point of view of organisations,
it is crucial that they take use of construction materials that is highly good. There must be use
of high quality cements for the construction purpose so as to give effective strength to the
whole structure (Paltsev, et. al. 2011). In the drilling purpose, there must be use of advanced
technologies. This would help them in both the processes easier and will help them in finding
the faults that exist in the whole structure. The innovation and advancements must be taken a
proper care, so as to stay in the competition.

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Recommendations
In any industry, safety must be the first priority. In the oil and gas industry, since there is a
constant requirement of maintaining the balance between economic and environmental
concerns hence a proper plan for it must be made. It is crucial that any organisation dedicates
a proper amount of money in the safety concerns that threatens this industry. It is essential
that an organisation understands its CSR responsibilities (MADGWICK, 2018). For this an
effective CSR planning is highly crucial. This can also be done with the help of firms that are
highly recognised in the construction purpose. At the time of giving things on contract, it is
essential that a company listens to all the partners especially that are assigned for purpose of
safety.
CONCLUSION
From the above based report, it can be concluded that economy and environmental issues are
present in the modern day business. In New Zealand there are many oil and gas extraction
process that are going on. These are creating the environmental issues but it is essential for
tackling the economic issues in the country. The problem of oil spills and over extraction of
oil and gas creates the problems related to sustainability. In order to reduce this problems
company needs to have good infrastructure and construction materials along with the use of
technologies. Taking help of bigger firms for construction could help the company.
REFERENCES
Allen, P.A. and Allen, J.R., 2013. Basin analysis: Principles and application to petroleum
play assessment. John Wiley & Sons.

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Byrd, H. and Leardini, P., 2011. Green buildings: issues for New Zealand. Procedia
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Cohen, G., Joutz, F. and Loungani, P., 2011. Measuring energy security: Trends in the
diversification of oil and natural gas supplies. Energy policy, 39(9), pp.4860-4869.
Kucukvar, M. and Tatari, O., 2013. Towards a triple bottom-line sustainability assessment of
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Lukawski, M.Z., Anderson, B.J., Augustine, C., Capuano Jr, L.E., Beckers, K.F., Livesay, B.
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MADGWICK, C., (2018) We'll forgo the economic benefits of producing our own energy if
we ban exploration, says industry boss. [Online]. Available at:
https://www.stuff.co.nz/environment/102568754/well-forgo-the-economic-benefits-of-
producing-our-own-energy-if-we-ban-exploration-says-industry-boss. [Accessed on 6 July
2018]
Mengerink, K.J., Van Dover, C.L., Ardron, J., Baker, M., Escobar-Briones, E., Gjerde, K.,
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Ministry for the environment, (2018) Case study 2: Issues and barriers facing the oil and gas
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promote-sustainable-development-new-8 [Accessed on 6 July 2018]
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Rankin, M., Windsor, C. and Wahyuni, D., 2011. An investigation of voluntary corporate
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Ross, M., 2012. The oil curse: how petroleum wealth shapes the development of nations.
Princeton University Press.
Tonelli, F., Evans, S. and Taticchi, P., 2013. Industrial sustainability: challenges,
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pp.143-163.