"We'd love reduced royalties and tax take and that would do as PEANZ suggests," Taylor told EnergyReview.Net today.
"As an industry we have to recognise that the Crown is a key stakeholder in this and that New Zealand has one of the more favourable petroleum fiscal regimes in the world.
"However, the real challenge is the quality of the exploration and production play, on a risked basis, relative to a high industry cost structure. The latter arises from the tyranny of distance and lack of industry scale. This acts as a disincentive to exploration risk capital investment, with adverse impacts on industry scale, technology application and innovation.
"It is, in effect, a negative feedback loop," Taylor said from Wellington.
PEANZ executive director Mike Patrick yesterday called for significantly increased levels of government funding to give New Zealand the best possible chance of finding more traditional energy resources, including more gas, to replace the faltering Maui field.
Patrick said new gas supplies were far preferable to burning coal to cover the predicted energy supply shortfall later this decade, as coal contained much more carbon than gas and, when burnt, raised the levels of greenhouse gases in the atmosphere more than natural gas did.
Patrick also said the Government needed to consider waiving petroleum royalties in certain circumstances, to enable marginally economic gas fields to be brought quickly into production. Another option would be for the government to adjust its royalty regime for already producing fields to extend their economic life. Changing the Maui gas sales contracts to allow a scaled increase in the real price of Maui gas for a few years, should encourage the exploitation of presently identified but undeveloped prospects and structures. This could effectively extend the life of Maui by perhaps several years.
Taylor said that lower royalty and taxes would help marginal field development and improve the economics of the marginal barrel of oil (boe) of production, thus extending reserve life and ultimate hydrocarbon recovery.
"But this sort of marginal extension play doesn't fully address the long term sustainability issue.
"To do that we require greater industry innovation and the application of technology, leading to improved full cycle finding and development costs, that generate the incentives for international risk capital investment.
"In short, the New Zealand exploration and production industry has to boot-strap itself into the situation of being competitive in the arena of competing for global exploration and production capital."
It is known the recent Pohokura gas and Rimu-Kauri oil discoveries have increased the perceived perception of New Zealand's, particularly Taranaki's, prospectivity and resulted in more players, with more work programs, participating in the Kiwi energy industry than ever before.
"Nothing attracts investment like success, and there's nothing like successful investment to create a sustainable industry," Taylor concluded.
