February 19, 2015
The huge drop in world oil prices, expected to linger, has significantly lowered the prospect of Hawke’s Bay becoming the next Taranaki any time soon.
On February 17th TAG Oil, the company most involved in oil and gas exploration in Hawke’s Bay, issued its latest financials. The report included this assessment of the global situation and its impact on TAG’s capital expenditure plans:
Notice the elimination of a previously budgeted $19 million exploration investment slated for the ‘East Coast Basin’, and the comment that TAG would either find a partner to move forward or relinquish its permits. That looked to me like TAG was effectively calling it quits, at least for the foreseeable future, in our neck of the woods.
I asked TAG for an explanation. TAG Oil representative Garth Johnson responded as follows:
“TAG’s plan is to postpone further investment in the East Coast Basin. In the event that the Company can’t find a partner in the near future to contribute funding to further exploration, TAG will consider relinquishing the permits with the view that the Company could participate in a future blocks offer to once again acquire the areas of interest should the review of the data, as well as higher oil prices, encourage the Company to do so at a later date.”
I’m sure there are many in Hawke’s Bay who will be happy to hear the pressure is off for oil and gas development in the region, for now.
But this is all the more reason for the Regional Council to get moving with its ‘Energy Futures’ consultation process, as committed in HBRC’s current annual plan. We have a window of opportunity to consider our energy options, as opposed to simply drifting with the tide. The response received during the ‘pre-consultation’ conducted around the ‘Big Six’ issues HBRC floated for public comment in December, anticipating this year’s Long Term Plan (LTP) refresh, demonstrated that there’s deep public interest in energy issues and opportunities in the region.
HBRC staff have been doing some planning on how to address our energy future — what homework needs to be done, the consulting help required, and what the consultation process might entail. I’m confident that an inclusive process will soon get underway, with a full range of stakeholders to be involved in shaping the inquiry.
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February 5, 2015
Yesterday the Tukituki Board of Inquiry (BOI) rejected HBRC’s proposed approach to addressing the river’s water quality, and in so doing, dealt a major — perhaps fatal — body blow to HBRIC’s proposed dam.
Not a real surprise, as HBRC and its slow-learning legal and planning advisers were simply trying to end-run a position the BOI was already committed to (and a position affirmed by the High Court).
But there’s a huge irony here, as the BOI was originally selected as the smooth decision-making pathway that HBRIC expected would avoid the pesky Environment Court and its irksome environmental sensibilities.
Throughout the HBRC-touted ‘stakeholder’ process on the dam, chaired by pre-Councillor Hewitt and chaperoned by Councillor Scott, environmentalists were ignored. The Council viewed their mere attendance as ticking the box for consultation. Consequently the revisionist HBRC account of that process omits the fact that all the environmental participants refused to endorse the final report! I was one of those.
Was there a warning sign there?
Nonetheless, the HBRC effectively said “Get stuffed” to the environmentalists. “Fight us at the BOI.”
And now — three times by my count (twice via the BOI and once in the High Court) — the environmentalists have successfully said in return: “No, you get stuffed!”
What environmentalists don’t want stuffed (further) is the Tukituki.
So to protect the river’s ecological health they’ve insisted that farmers be required to meet responsible limits on their nitrogen leaching into the catchment. That’s what the DIN (Dissolved Inorganic Nitrogen) limit is all about.
HBRIC now must assess whether such limits will allow for the scale of farming intensification on which the economic case for the dam is predicated. When the BOI proposed the DIN limit in its initial decision, HBRIC was aghast and declared such a restriction would kill the dam. Now that the DIN limit will stand, it will be interesting indeed to see HBRIC’s fresh assessment.
Mind you, the matter is not yet fully closed.
Having stipulated yesterday that there can be no substitute for regulating DIN, the BOI still needs to hear from the parties how that regulation should be implemented. The parties involved in the matter have been given until the end of February to go through a process of tabling their recommendations, responding to each other, conferencing, and reporting back to the BOI.
Only then will the BOI decide on the final scheme.
So now two of the key conditions that the proposed dam must meet to be acceptable to the Regional Council are under severe stress: 1) will the environmental requirements be ‘workable’ as assessed by HBRIC; and b) will farmer sign-up for the proposed dam’s water (already sluggish at best) somehow revive, or will it be further deterred by tougher environmental protections?
And underlying both of those issues: will HBRC fund another three months or more of HBRIC’s paddling upstream, at $250,000+ per month?
Tom Belford2 comments »
January 27, 2015
At the Regional Council’s last meeting in December, we received a progress report on the dam project from our holding company, HBRIC.
It reminded me of this Dilbert cartoon …
If there isn’t any progress, use a larger font!
It worked at HBRC in December. Sufficient Councillors responded with the ‘slow clap’.
The next meeting of HBRC is Wednesday.
We’re supposed to get a regular monthly update from HBRIC on its activities. Not on the agenda. Apparently we get one when they feel like it.
We were told (at the December meeting) to expect a report of significant progress over the coming month in getting farmers to sign water user agreements. As one HBRIC director noted … farmers do work over the holidays. No such report is on the agenda.
We were told (at the December meeting) that it would cost about $250,000 a month (excluding HBRIC CEO Andrew Newman’s salary) to continue the dam project after 31 March (when current funding ends). But HBRIC directors suggested that un-named other parties with an interest in the scheme would be recruited to, as they said, “share the pain”. No report on the Wednesday agenda on funding either.
As usual, HBRIC’s gone silent.
Before arriving on the Council I supported the creation of HBRIC, with the proviso that strong accountability provisions be incorporated into the relevant establishment and governing documents. That never happened.
And now, about 16 months into my elected term, I’ve found HBRIC to be consistently and fiercely resistant to genuine transparency and public accountability. I and some of my colleagues have scratched and clawed for the few scraps of information we have received about the dam project. On occasion we’ve received information only after it’s been shared elsewhere. We’ve been ‘granted’ private briefings with note-taking barred. Most discussions occur in workshops and public-excluded sessions.
Without accountability, what we now have is an HBRIC team preparing to ask us to throw good money after bad. A project that is twisting in the wind. A punch drunk HBRIC/HBRC team committed to an environmental ‘strategy’ for the Tukituki that has been knocked down twice, but still raring to go for another round.
Moreover, there’s not been the slightest hint that ‘oversight’ by HBRIC has added one iota of benefit to the governance of HBRIC’s one and only existing asset … Napier Port. HBRIC has added zero commercial acumen to an already capable Port Board. If anything, when serious problems arose last harvest season with Port logistics, HBRIC was imply an irrelevant layer interposed between Council and the Port team.
As presently envisioned, if the dam were to proceed, a separate company would be set up, like the Port, to run the scheme. And just like the Port, one further layer away from accountability. Even worse, if this dam company were to be infected with the same leadership and operational style as HBRIC, the public might as well forget about that company ever being called to account.
All that HBRIC has accomplished — both as supervisor of the Port Board and as manager of the dam project — is obfuscation. If HBRIC has any constituency in Hawke’s Bay outside its existing directors, a gaggle of Regional Councillors and its CEO, I’ve yet to discover them.
Yet on Wednesday Regional Councillors are being asked to approve a process for replacing the ‘transition board’ of HBRIC with a permanent board. In other words, a candidate selection process.
Based on what I’ve witnessed as a Councillor, I’m not inclined to endorse a candidate selection process. What we should be considering is the dis-establishment of HBRIC.
Of course, my view will be a minority view. So I guess I will need to console myself that maybe what is being approved Wednesday is actually a de-selection process.
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January 18, 2015
Forgive a bit of personal reflection here, but yesterday marked exactly ten years of the Belfords living in Hawke’s Bay.
With absolutely no regrets.
Still, Brooks and I have probably felt some need to ‘validate’ the wisdom of our risky impulse, with both of us, consequently, wanting to do our part in helping Hawke’s Bay become all it might be.
Brooks has earned a counseling degree and spends most of her time counseling at the Heretaunga Women’s Centre and DOVE. And I do my thing by being a pain in the butt to folks who don’t quite ‘get’ what makes HB special … and could make it even more so.
Claire, in the first instance a ‘victim’ of her parents’ choices, has nevertheless managed to thrive, and will soon complete her Commerce degree with honours at Victoria.
So thanks to all of you who have welcomed and supported us here in Hawke’s Bay and made this such an easy and productive transition.
However, as the saying goes, ‘No good deed goes unpunished’ … Now we’re good for at least another ten years in HB!
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December 28, 2014
At its final meeting in December, the Regional Council received briefings from both legal counsel and HBRIC on matters regarding the dam.
These briefings occurred just four days after the High Court instructed the Tukituki Board of Inquiry (BOI) to revisit its handling of a most critical component of its plan for protecting water quality in the catchment — namely, the regulation of nitrogen, a key pollutant (specifically, dissolved inorganic nitrogen, DIN).
The HBRIC briefing was more consequential in terms of shedding light on the viability of the dam.
HBRIC had previously declared that the dam was simply not viable if the final regulatory regime required nitrogen to be limited in the manner the BOI originally proposed in its ‘draft’ decision. When the BOI removed the ‘offending’ limits in its final decision, Fish & Game, Forest & Bird, and the Environmental Defence Society appealed the change to the High Court. The High Court sided emphatically with the environmentalists; in fact, it ordered HBRC (that’s you, ratepayers) to pay the court costs of the enviro appellants. Message: their complaints are anything but frivolous.
The environmental team — with two wins and a ratepayer-replenished bank account — has good cause to feel bullish about its approach to protecting the Tukituki.
On the other hand, that’s two strikes against the team that has led the HBRC/HBRIC strategy on water quality management. First, the BOI sided with enviros on how to manage the Tukituki’s water quality (to the astonishment of HBRC/HBRIC); and second, the High Court ruled in favour of the enviros, as described above. One might reasonably ask, where is HBRC/HBRIC getting all its bad advice? And how long will that continue?
Rather than face ‘three strikes and you’re out’, one might think that HBRC would invite some fresh thinking on its approach before charging back to the BOI with a new position when the BOI attempts to resolve the matter in the first quarter of the year. [The BOI has asked the parties for their views by 20 January on how the review process should be conducted. This does not appear to be a process that the BOI will rush, given the wrist slap it received from the High Court.]
However, when I queried at the HBRC meeting whether councillors would be engaged as a new position was formulated, the response was a curt: when we’ve come up with our position, we’ll “inform” you. As it turned out, by 19 December, two days after this exchange, the BOI had already received recommendations from counsel for HBRC/HBRIC! So much for conferring with Councillors.
Councillor Beaven then pressed the issue and secured a commitment that “Council input” will be part of HBRC’s process, although such input would need to occur in public-excluded session.
You might recall that the last time HBRC went through this sort of drill (when it took a position seeking amendment of the BOI’s initial draft decision), Councillors were not consulted. As a consequence, Councillors Barker, Beaven, Graham and myself filed our own submission endorsing the draft decision as it stood.
The lack of closure — anytime soon — around the regulatory regime obviously complicates HBRIC’s attempts to secure unconditional water user purchase agreements. Farmers want to know what ‘headroom’ they will have, if any, to increase their nitrogen leaching if they wish to intensify their farming via irrigation. The answer might well be: No headroom.
Thus, even the 5.4 million cubic metres of water that HBRIC reports farmers have currently signed up for is still conditional on a favourable regulatory outcome. This is the uncertain environment in which HBRIC now says it must sell 45-46 million cubes of water — committed unconditionally — to proceed with the scheme.
You might have read in HB Today that I commented I was “flabbergasted” that HBRIC Directors were hopeful that this level of uptake could be reached even by 30 June, let alone by the current cut-off date of 31 March … HBRIC’s project development is only funded by HBRC through the first three months of 2015. And given continuing controversy over the proper approach to Tukituki water quality, I stand by that comment.
HBRIC Director Jim Scotland told Councillors that the development process would “conservatively” cost $250,000 per month if continued beyond March. His candid remarks made clear that HBRIC Directors have no appetite for coming before HBRC Councillors on 28 January to ask for $750,000 to fund the development process for an additional three months. Instead, HBRIC is seeking — as HBRIC Director Danelle Dinsdale put it — to “shift the pain” for providing additional funding to others, including potential suppliers, who have a vested interest in seeing the dam built. A polite term for this might be ‘tithing’.
How does that make you feel about the integrity of this process? Worried that Councillors might not have the guts to vote another $750,000 into a cracking dam, HBRIC Directors have asked Andrew Newman to put the arm on suppliers (eg, OHL-Hawkins Construction, who hold the dam construction contract) and — one might surmise — other allies like Irrigation NZ (after all, they claim over 40 million cubes of dam water are already signed up), Dairy NZ and Fed Farmers. How about the CHB District Council?
Personally, I don’t see why HBRIC Directors are nervous at all about snagging another $750,000 from HBRC. I can think of five Councillors who probably would have awarded it on the day, given their unshakeable optimism about the project.
Oddly, while HBRIC Directors seem nervous about hitting the HBRC till for $750,000, apparently HBRIC CEO Andrew Newman — eager not to miss the next construction season — rolled into the December HBRIC Board meeting seeking authority to commit $20 million to move into preparations for dam construction. Talk about living on another planet!
HBRIC Director Scotland reassured Councillors that this request had been set aside, perhaps aiming to convince more skeptical Councillors like me that the Board indeed had the moxie to apply brakes to the runaway train. Or it was simply a classic marketing ploy: “Our diligence has saved you $20 million; surely in gratitude you can stake us another $750,000.”
I asked rhetorically when HBRIC Directors might decide the dam had been left “twisting in the wind” long enough? When might they begin considering an exit strategy from this scheme? How would they go about that?
Director Scotland responded that the Board was constantly asking those sorts of questions. Reassuring, I guess, but not really an answer to “When was enough, enough?”
Kudos, though, to Director Scotland for his forthcoming manner throughout.
This might all sound stranger than fiction, but it’s all available for your own leisurely viewing pleasure right here in the HBRC video archive (go to HBRIC Update). Go ahead, pour yourself a drink and treat yourself to a summer school civics lesson!
Hope you’ve had a splendid Christmas and still have some days of relaxation ahead!
P.S. As for the lawyer’s briefing … not reassuring. Methinks you have a basic problem when the same legal team is representing both the dam advocate (HBRIC) AND the supposed defender of the purse and environment (HBRC). My concern has been that actual construction of the dam could proceed before environmental commitments were firmly locked into place by so-called ‘Farm Environmental Management Plans’ which, under Plan Change 6, must be negotiated between farmers and HBRIC. Nothing ‘our’ lawyer said convinced me that wasn’t a plausible outcome, and one to be avoided. You can see that exchange also in HBRC’s video archive (go to Legal Review of RWSS Water User Agreement).6 comments »
December 12, 2014
The High Court has ruled on the Tukituki Board of Inquiry plan for the catchment, supporting the environmental appellants, and awarding reimbursement of costs to Fish & Game and Forest & Bird, to be paid by HBRC, HBRIC and co-respondents Dairy NZ, Fed Farmers and Fonterra.
Here’s the crux …
“The effect of my judgment is that the Board will need to reconsider Rule TT1(j) and devise an appropriate mechanism for monitoring the amount of DIN that enters the Catchment Area. The Board will also have to reconsider its terms of consent for the Ruataniwha Water Storage Scheme.”
And then …
“ The parties have all said that if I find the Board made a material error of law I should direct the Board to reconsider the relevant portion of its report in light of my findings. I agree that is the appropriate course to follow. The Board is seized of significant quantities of evidence and information that could not be properly conveyed to me when dealing with appeals based only on questions of law. I therefore direct the Board to reconsider and change Rule TT1(j). When the Board changes Rule TT1(j) it will also need to amend the conditions of consent to the Ruataniwha Water Storage Scheme project. In making this direction I am not suggesting the Board should necessarily revert to its draft Rule TT1(j). The Board will need to consider a range of possibilities and ensure the parties have had a fair opportunity to comment on the final version of Rule TT1(j).”
So … back to the drawing boards on how DIN (nitrogen) limits should be implemented in relation to both Plan Change 6 and the dam. More uncertainty ahead for the dam.
The Regional Council is scheduled to get a progress report from HBRIC at its Wednesday the 17th meeting.
Might be worth attending.
More to come on implications.
P.S. The full decision is here: Hawke’s Bay and Eastern Fish and Game Councils v Hawke’s Bay Regional Council.
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December 12, 2014
People often ask me (and wife Brooks) why we moved to New Zealand.
Two reports in today’s NY Times provide a hint …
The first says that, for the first time in two decades of polling, a majority of Americans (52%) now say it is more important to protect gun ownership rights, while 46% say the priority should be controlled access to firearms. In 2000, only 29% chose gun rights over gun control.
The second says that 50% of Americans now believe that torture of terrorism suspects can ‘often or sometimes’ be justified. In 2005, this percentage was 38%.
Not auspicious trends.
Meantime, the hottest ‘education’ topic in the US news is campus rape and the hottest environmental issue is fracking.
I guess those might be considered reasons for leaving the US, rather than for choosing NZ.
As for that, one important reason was that we thought NZ was ‘clean and green’.
We like to think we still have some ability to influence that.
Tom Belfordone comment so far »