Wednesday, November 29, 2023

John MacDonald: The Marsden Point pipedream needs shattering

Forget about it.

That’s pretty much the message the Government is getting today from the owner of the Marsden Point oil refinery.

That’s the Marsden Point oil refinery that doesn’t do any refining these days because, as you’ll remember, it was shut down in April last year by its private owner which, back then, was known as Refining NZ. These days it’s known as Channel Infrastructure.

240 jobs went in the process and, ever since, the closure has been blamed for all sorts of things from high fuel prices to cruddy roads.

That’s because, when it was operating, Marsden Point produced about 70 percent of the bitumen used in New Zealand for roads. Now we have to import 100 percent of the bitumen we need.

And we seem to think that the stuff from overseas is second-rate, which is why Marsden Point always comes up when we’re talking about potholes.

And, of course, we now also import all our refined fuel. Because we don’t have a functioning refinery here.

So, prior to the election, NZ First picked up on all this talk about Marsden Point and, as part of its deal with National, the coalition government is going to investigate re-opening it.

Which I predict will mean a truckload of time and taxpayer money going into something that will go nowhere. It will come to nothing.

That’s because the people who know a thing-or-two about running Marsden Point are saying today that it would cost billions to get it up and running again because there is nothing there that can just be plugged-in and cranked up again.

“There is no part of the former refinery that can be restarted.” That’s a direct quote from the person speaking on behalf of the owner.

They’re saying they haven’t done costings but expect it would be billions and it would take a number of years.

So, as far as I’m concerned, that horse has bolted and we need to forget about having an oil refinery here.

Perhaps if there’s one thing the former government can be criticised for when it comes to Marsden Point, is whether or not it did enough to keep it going.

We all know how the Tiwai Point aluminium smelter is pretty much only operating because the owners get big power discounts. So maybe that’s somewhere where Labour did drop the ball, and perhaps it could have done more to keep Marsden Point operating.

Because the reason why it was closed in the first place is that the fuel companies - which were shareholders in the refinery - thought it would be more cost-effective for them to import pre-refined petrol and diesel, instead of doing it here.

So maybe the former government could have done something to make it more attractive to keep it going. In fact, former energy minister Megan Woods did float the idea of saving the refinery by underwriting its operations for up to 10 years, but her Cabinet colleagues weren’t up for it.

So that didn’t happen. The refinery is now closed. And I just think we have to get over it and I think the Government needs to drop this idea of looking into re-opening it.

Because, if the people who know a thing-or-two about running a refinery think it’s a stupid idea, then who am I going to listen to? The people who know what they’re on about? Or a politician who has heard a bit of noise and reckons there might be some political mileage in it?

I’ll go with the refinery experts any day, thanks. And I think the government should do the same.

John MacDonald is the Canterbury Mornings host on Newstalk ZB Christchurch. This article was first published HERE


Rob Beechey said...

One of the lessons learned during the 70s oil shock was the value of oil independence. A lesson largely forgotten by the left wing governments and media today. The Biden administration is a great example after he stupidly reversed Trumps oil surplus success into now having to kowtow to Iran and the Middle Eastern suppliers.
The owners of Marsden should never have been allowed to destroy a strategically important asset to NZ by the Ardern Govt as it speculated on replacing it with Auckland’s shipping port.
It once turned crude oil into petrol and jet fuel and we all know how badly the contaminated batches of imported jet fuel impacted on our aviation industry of late.
I believe it vital to take greater control of NZ’s destiny than accept the inflationary influences of foreign suppliers. So John MacDonald, the journey must start somewhere and therefore Marsden Point is a worthy target.

Scott said...

I'd like the government to investigate it fully and see if it's possible? We need to be a proper country that makes things and refines things, not just imports everything from China.

DeeM said...

This should fall into the Energy Security review which is going to be done by our new government.
Fossil fuels, much to the dismay and surprise of the average weed-infested Greenie, are essential to any modern country and will remain so for the foreseeable future.

We have our own oil and gas reserves and these are likely going to be developed again after the Ardern brainstorm.
In that case, having your own refinery also makes sense.

We've seen how quickly the shit hits the fan around the World and oil supply and prices are often a casualty. Unlike dear old UN Clarkey's view that we're all friends now so we can just get our stuff from somewhere else, the real world says different.

Let's see what a proper investigation reveals before we start jumping the gun, eh John.

orowhana said...

I have close family who worked at Marsden Point. Over $ 40 million a year has been removed from Northland's economy due to it's closure. The loss of skilled workers was never taken into account by clueless Labour. Oil refining in the last 3 years has been the most profitable it has ever been. Channel infrastructure are bandits and deliberately sabotaged the hydro cracker as a staring point for the destruction of valuable asset. Ampol are thoroughly dishonest and demanded the Refinery be closed before they would buy out Z Energy. Z Energy was not private but 2/3 owned by the Cullen Fund and ACC. This closure was driven by Wellington.
We used to have the cleanest fuel in the world due to our high refining standards we now have the dirtiest.Thanks Dumbcinda. No plan for bio fuel refining exists NOTHING for future fuel security.Huge advances in fossil fuel tech( especially gas) were made in the USA under Obama. None of the tech is coming to NZ because of the ignorance lack of vision and policy of the Labour Government. We are paying far too much for fuel and it is Labour's fault. Fuel costs will keep us going backwards at a rate that will only accelerate thanks to Labour. The Greens are idiots and Labour are morons when it comes to Energy.

Anonymous said...

The Marsden Point Oil Refinery was constructed in 1962 and paid for by our people. It was officially opened on the 30th of May 1964.
Following the election of the Roger Douglas-driven Labour Government in 1984, the Petroleum Sector Reform Act was introduced. This Act deregulated the petroleum industry, with 1,500 workers expected to lose their jobs. The Refinery assets we paid for were transferred by the Government to the New Zealand Refining Company Limited, a consortium of the five major petrol retailers. BP, Mobil and Z Energy are currently the major shareholders. The Government borrowed $80 million and gave it to the New Zealand Refining Company to enable it to adapt to the new environment. By 2003, the refinery produced 70% of New Zealand’s petrol and 90% of its diesel.
Instead of assessing the risk to the people of this country and employing a more responsible approach, the shareholders, board of executives, and management have taken on a strategy of sabotaging the refinery's capabilities.
• Reports from operators inside the refinery claim that our roads have been insufficiently maintained because the refinery closed down bitumen production 18 months ago! This was done during the best time to fix the roads and has left us reliant on importing low-quality bitumen that is three times the price!
• The operators also state that CO2 collection has halted; this will add to the cost of food as the captured CO2 is used in food preservation and the carbonation of beverages. Watch out for the announcement of a price freeze!
• The oil refining capabilities of Marsden Point have, for the most part, contributed to a diverse range of products that sustain our Nation. It is in the top quarter of refineries worldwide for its efficiency, quality of products, and environmental consideration.
• The refinery has also been profitable; the COVID-19 response had a small effect on its profits. However, almost all the operators claim that poor management and the seemingly purposeful advancement of incompetence into the management’s ranks have contributed far more to its capitulation.
• Operators also claim that some of the refined fuel coming in from overseas is of such low quality that it requires extra refining from our refinery. This may pose a risk to our vehicles; what effect will the quality of the imported fuel have on our vehicles? And why are we paying three times as much for poorer quality bitumen?
• Our Natural Gas Infrastructure (NGI) creates condensate, which is a light crude than can be refined into fuel. If our refinery was improved, we could refine light crude and residue into diesel, naphtha, and kerosene in an emergency.
• (REF- From “Dig in at Marsden” website)

Erik said...

I’d like to see a little more than ‘it’s too hard, we can’t do it’.

It’s not an acceptable alternative to continue to rely solely on imports for all refined petroleum products.

I encourage the incoming government to ignore the likes of Mr. MacDonald and create a coherent energy policy that decreases New Zealand’s reliance on imports and promotes energy independence.

Anonymous said...

Reality check: it is cheaper to import refined products than to import crude then refine it in NZ.

The name though, Channel Infrastructure, is laughable. It sounds like a plumbing company. Or an earthwork business.

If that is all the shareholders ie oil companies, could agree on then what a joke.

Try an electric vehicle instead….

Geoff. said...

As Europe has found out since the start of the Ukraine war, relying on another country for any essential supply carries certain risks. However I have worked in heavy industry for many years and totally agree that once a plant is shut down, trying to restart it is lengthy and unbelievably expensive. The other point is that while shut down, foreign plants have continued to upgrade and improve, and reduce their costs, which makes our plant even less competitive. Unless someone has a bottomless pit of money to throw at it, I'm afraid that Marsden Points ship has sailed. The best we can hope for is to get multiple suppliers for our petrol/diesel needs.