Big boost for NZ’s gas supply – and a setback for the climate-change warriors

Here’s   a  bit of good  news  on the  energy  front to  mitigate some  of the  gloom  created by soaring costs, potential  black-outs and rising  carbon emissions.

Genesis  Energy  reported this week  New Zealand’s gas supply has been boosted  after a $72m project at the Kupe gas production station near New Plymouth has been  finished.

The inlet compression project, undertaken by Genesis and its Kupe Joint Venture partners, operator Beach Energy and NZ Oil & Gas, increases production back to the plant’s full capacity of 77TJs a day, the equivalent of supplying around 15% of NZ’s natural gas demand.

Genesis’ group manager Kupe JV Craig Brown said despite some Covid-19 supply chain delays, the project was delivered within budget and with no lost-time injuries from 170,000 person-hours on site – a testament to the strong safety focus of the team on the ground.

Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban

Soaring energy  bills are a  problem for  firms,  households,  and  the  government. This  was  a  headline  in  The Economist last week – but it  can’t  happen here, can it?

After  all,  NZ has   plenty    of energy.  Unlike Europe, 80%  of  its electricity is  from renewable  sources. And  according  to oil industry  authorities, NZ is  surrounded  by a massive  continental  shelf — the fifth  largest in the  world, beneath  which  lie  vast  quantities  of  undiscovered  natural gas and, probably, some light oil.

So  surely  NZ  can face  the  future  with confidence?

Well,  no:  let’s not forget Prime Minister  Jacinda  Ardern had her “non-nuclear” moment and  placed a ban on new offshore exploration permits  for  oil  and  gas.  Since  then,  as  international oil explorers gave  up  their  offshore   exploration  licences, supplies  from existing  producing  wells have begun to  diminish for several reasons.

Higher  costs  are  starting  to  flow  into  household and  business  gas  bills. Vector  is  increasing  Ongas LPG  cylinders  from  $115.026  to  $125.82.

How the govt’s ban on oil and gas exploration has tightened supplies – and resulted in NZ importing 2m tonnes of coal

New Zealand  has   been   facing some of the most challenging energy market conditions in over a decade, with simultaneous shortages in natural gas and hydro-electric generation. The  consequence  has  been  sustained  high  wholesale electricity  prices,   creating issues for  electricity retailers without their  own  generating  capacity, to the point  where Electric  Kiwi – for  example – says it  is turning to  focus on  the Australian market.

Some  market-watchers  contend the  problems  trace  back  to  the  decision  of  the  Ardern  government to  ban  any  further  offshore exploration for oil  and gas.  That  drove  away   not  only  oil exploration companies   but also  the offshore  rigs   needed   to  complete  planned drilling  programmes.

Whether  that  is the  case  or  not, some  of  the  big generators  like  Contact  Energy  and  Genesis  are  said by  critics to  be  creaming  it – but  from  their  point of  view,  they  are   doing  their  utmost  to meet  the  high  demand  for  electricity.  Their  shareholders certainly  should be  happy   with the  healthy  margins  they are  reporting  while  wholesale  prices remain very  high.

Over $1bn is invested in renewable energy but meanwhile NZ must import coal to generate electricity

Two   of  the  Labour  government’s  major  policies are  to reduce  carbon  emissions  in the  battle against  climate change, and  to   produce 100% of  NZ’s  energy from renewable sources.

So   are those  policies   going?

Reports  this week make  it  clear:  poorly.

So  badly,  indeed, that  Energy  Minister Megan  Woods  could be  living  in  la-la  land.

This  was  her  response  to RNZ’s finding  that in the same year  the government declared a climate emergency, imports of an especially dirty type of coal from Indonesia topped a million tonnes for the first time since 2006:

“This government is not been [sic] satisfied with this reliance on fossil fuels and last year we backed up our goal to have a fully renewable electricity grid with a $30m investigation into solving the dry year problem.

“The NZ Battery project is investigating the country’s potential for pumped hydro, as well as comparator technologies, and is progressing well but will take time.”

CO2 emissions from energy are down on Trump’s watch – thanks to fracking and competition

Energy and climate change are key issues in the November 3 US presidential elections. Democratic challenged Joe Biden says he will return the US to the Paris Climate Accord, from which President Donald Trump withdrew, and hasten new and renewable energy projects.

But a new Energy Information Administration report demonstrates how fracking and competitive energy markets have done more to reduce CO2 emissions over the last decade than regulation and renewable subsidies.

Earlier this year the International Energy Agency said the US saw the largest decline in energy-related CO2 emissions in 2019 on a country basis due to a 15% reduction in coal for power generation while US emissions are now down almost 1 Gigatonne from their peak in the year 2000, the largest absolute decline by any country over that period.

 

According to the Energy Information Administration report, energy-related CO2 emissions in the US fell 2.8% last year with energy companies replacing coal and heating oil with less expensive natural gas. Hydraulic fracturing combined with horizontal drilling produced a surge of natural gas production in the Midwest and Southwest. With natural gas prices falling, many coal plants have shut up shop.

 

Between 2007 and 2019, CO2 emissions from coal declined by more than 50% and by 15% in 2019 alone. Between 2016 and 2019 the share of electricity generated by natural gas rose from 33.7% to 38.1% and by non-carbon generation (including nuclear and hydropower) to from 35.5% to 38.2%. Coal generation fell from 30.3% to 23.3%.

The report says power generation from natural gas accounts for 60% of the country’s decline in CO2 emissions from electricity since 2010. The carbon intensity of the country’s energy declined at about the same rate during the first three years of the Trump Administration, as from 2009 to 2016.

 

Promising gas find is reported without much hoopla – Taranaki will welcome the boost but the Greens are coy

In  another  era,  it  would have  been the  lead story  on  every  news channel.  But in a  country  brainwashed  into believing  it’s  apocalypse now,  either  from  global warming or  Covid-19  (and possibly  both),   news  of   a  “significant”   oil and gas  discovery offshore  in Taranaki  barely  registered   in the   mainstream  media,  although the   New Zealand  Herald    did   record  it   in the  business  pages.

There  has not  been a  major energy   find  in NZ  since  2006, and given  New Zealand has  only 11  years  of  gas  reserves left,  the discovery could be an exciting  outcome     at a  crucial   phase for the  NZ  economy.

Austrian giant  OMV reported  the Toutouwai-1 wildcat, drilled to a total depth of 4,317m some 50 km off the Taranaki coast in 130m of water, encountered several hydrocarbon-charged reservoir zones during drilling.