Story: Oil and gas

Page 1. The need for oil and gas

All images & media in this story

Oil and gas, also known as hydrocarbons or petroleum, are the energy sources that power cars and aeroplanes, and provide heating in many parts of the world. When hydrocarbons come out of the ground they are a mixture of colourless gases, light-yellow to dark-brown and black liquids, semi-solids (waxes and bitumen) and solids (asphalt, tar and pitch). To be useable, hydrocarbons first need to be processed at an oil refinery or gas plant.

Growing demand

People are using oil at an increasing rate. While the world is not about to run out, retrieval of easily extractable oil is predicted to peak soon. Pessimists say this may have already happened, or that the peak will occur around 2016, while optimists think 2040 is a more realistic date.

New Zealand supply

Although a small amount of oil was found near Taranaki in 1865, until the late 20th century virtually all the petrol and oil used in New Zealand was imported. Most towns had their own reticulated gas, made from bituminous coal.

The discovery of the onshore Kāpuni gas field (1959), the huge offshore Māui gas field (1969) and the McKee oilfield (1979) confirmed the hydrocarbon potential of Taranaki. These, and other more recent discoveries, allowed New Zealand to be self-sufficient in natural gas from the 1970s and to attain some domestic oil supply over the 1980s and 1990s. The depletion of the Māui gas field (which also produced some oil) has seen both oil and gas production drop drastically over the early 2000s.

New Zealand use

New Zealand imports most of its oil, so it is very vulnerable to increases in the international oil price. Major consumers of oil products (petrol, diesel, aviation fuel and fuel oil) in the year ended March 2005 were domestic transport (84%), industrial users (7%), agricultural users (5%), commercial users (3%) and residential users (1%). Oil consumption in the year ended March 2005 was 250 petajoules – a 5% increase on the March 2003 figure.

Companies

Four international companies dominate petroleum distribution and retailing: BP, Mobil, Shell and Caltex. These companies have interests in the Marsden Point oil refinery and between them they own most bulk-storage facilities and many of the country’s petrol stations.

A New Zealand-owned company, Todd Brothers, imported petrol from Russia from the 1930s onwards, which was marketed under the Europa brand. BP purchased Europa in the 1970s, and it was phased out.

Whale grease

Māori on the East Coast of the North Island knew of oil seeps. In 1874, some were amused when they heard of the Poverty Bay Petroleum and Kerosene Company’s plans to put down a bore. According to Māori tradition, the oil was only on the surface – where a whale had slipped out of the hands of the priest Rongokako.

Oil refinery

New Zealand’s only oil refinery is at Marsden Point, Whāngārei, and it is designed to supply the majority of New Zealand’s demand. The country consumes 35–40 million barrels of oil per year or slightly over 100,000 barrels per day. This is only a small proportion of global consumption, which was 80 million barrels per day in 2004. The refinery operates on low-grade (and relatively low-cost) Middle East crude oil. About 94% of the hydrocarbons it processes are imported, with the remainder sourced from New Zealand fields. New Zealand’s higher-quality oil and condensate (light oil) are sold at higher prices on the international market – much of it to Australia.

The Marsden Point refinery produces a full range of petroleum products, including petrol, diesel, jet fuel and fuel oil. It is designed to make environmentally sound low-sulfur fuels. The sulfur extracted from the crude oil during refining is used locally to make fertiliser.

How to cite this page:

Roger Gregg and Carl Walrond, 'Oil and gas - The need for oil and gas', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/oil-and-gas/page-1 (accessed 23 May 2017)

Story by Roger Gregg and Carl Walrond, published 12 Jun 2006