- Ele Ludemann writes –
Is anyone surprised that New Zealand’s gas production is continuing to decline?
New Zealand’s natural gas production continues to decline according to the latest Energy Quarterly data released today by the Ministry of Business, Innovation and Employment (MBIE).
“Natural gas net production for the quarter was 31.89 PJ, a 12 per cent decrease on March 2023 and the lowest quarterly net production since March 1985,” says MBIE Markets Manager Mike Hayward.
“A planned outage at Pohokura gas field for maintenance in March added to the steady long-term decrease in gas production. The trend is expected to continue into Quarter 2 with Kapuni gas field going offline for planned maintenance in April.
Less gas is impacting businesses that need it at a time we need all businesses to be working at peak to help get the economy back on track.
“Reduced natural gas production had a direct impact on consumption with a 33 per cent drop in non-energy use compared with March 2023 quarter, and a 31 per cent decrease in energy use in the chemical sector. Driving this fall was Methanex, one of the largest users of gas in New Zealand reducing its production of methanol in response to less available gas supply.
And Labour’s policy that was driven by a mistaken attempt to reduce carbon emissions has resulted in an increase.
“Although the gas-fired Huntly Unit 5 returned to service earlier than scheduled following an unscheduled outage, the lower gas supply led to the need for coal-fired electricity generation to meet demand.
“Following a dryer summer and below normal rainfall, generation from gas and coal was needed to meet demand for electricity. Compared to the same quarter last year there was a 99 per cent increase in coal for electricity generation.
“As the share of renewable electricity generation decreased, greenhouse gas emissions from electricity generation increased to 861 kt CO2-e, a 21.5 per cent increase compared with the March 2023 quarter,” said Mike Hayward.
The UK is likely to make the same mistake.
The UK Labour Party is pledging to ban new drilling for oil and gas in the North Sea. Energy experts are urging them to learn from New Zealand’s mistake:
. . . New Zealand’s trailblazing policy, which was the first of its kind, became a key inspiration for the Labour Party’s own plan.
However, some in the party are now questioning the commitment after New Zealand resources minister Shane Jones last weekend denounced its own ban as a disaster – and revoked it.
It followed three years of rising energy prices that have left 110,000 households unable to warm their homes, 19pc of households struggling with bills and 40,000 of them having their power cut off due to unpaid bills, according to Consumer NZ.
Since April the situation has further deteriorated: Transpower, the equivalent of our National Grid, warned that the nation was at high risk of blackouts.
New Zealand’s shift to renewables meant it no longer had the generating power to keep the lights on during the cold spells that mark the Antipodean winter, said Transpower, as it begged consumers to cut their electricity consumption.
The threat to New Zealand’s energy security comes despite the fact that geologists have discovered billions of cubic metres of natural gas in the seabeds around the country.
Sean Rush, a leading New Zealand barrister specialising in petroleum licensing law and climate litigation, called the oil and gas ban “economic vandalism at its worst in exchange for virtue signalling at its finest”. . .
Economic vandalism and virtue signalling were hallmarks of the Labour government.
Jenny Stanning, director of external affairs at OEUK, says exploration is essential to simply slowing the decline in output.
“The New Zealand experience shows how important it is for countries to carefully manage energy transition and energy security. We will need oil and gas for decades to come so it makes sense to back our own industry rather than ramping up imports from abroad.” . .
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce – the region that lies at the heart of the UK offshore industry – says the UK needs a managed and nuanced transition to low carbon energy.
“The New Zealand experience is a salutary lesson in why it’s so important to devise a better approach to energy policy,” he says.
“Oil and gas will still make up 50pc of our energy requirements by the mid 2030s and will even provide over 20pc of our energy as we reach net zero by 2050.”
The UK should prioritise the North Sea as long as it needs oil and gas, believes Brendan Long, an energy analyst with WH Ireland Capital Markets.
“The resources of the UK can be produced with lower emissions than elsewhere in the world – reflecting the engineering acuity of the UK’s energy industry and their willingness to invest in low carbon strategies.”
New Zealand’s experience suggests much of the UK industry would not survive a ban on new drilling.
“Back in 2018, at the time of the ban, there were 20 international and five local companies engaged in exploration and production in New Zealand,” says John Carnegie, chief executive of Energy Resources Aotearoa, the local industry trade body.
“Since then, exploration has fallen dramatically. We only have nine remaining investors, seven international and two local. The rest have left.”
We’re paying for that with higher power prices and the risk of power cuts with no environmental gain.
Robin Allan, chairman of Brindex, which represents the UK’s independent offshore companies, says: “New Zealand’s ban was a politically motivated decision which ignored data on oil and gas demand, the advantages of domestic production and a realistic pace of decarbonisation.
Political motivation and a propensity to ignore data were also far too common with Labour.
“The Labour Party should see what is happening in front of their eyes in another island nation which has already implemented a poorly reasoned policy – and think again.” . .
If the polls are accurate the UK Labour Party will win the election.
If it fails to learn from New Zealand’s mistakes it will get the same result. Some can learn from others’ mistakes, the rest have to be the others.
This article by Ele Ludemann was first published on her blog, Homepaddock.
Point of Order 
I am afraid to say NZ’s “Mistake” is being too polite “An act of lunacy” would more appropriate.
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