Explore this Work Programme:
Overview
Gas Industry Co completed an investigation at the request of the Minister on whether current market, commercial and regulatory settings that provide for gas availability and flexibility are fit for purpose in supporting the energy transition.
New Zealand is transitioning to a future with 100% renewable electricity from 2030 and a net zero carbon economy by 2050. During the transition, the electricity industry needs security of gas supply. Major gas users also need certainty and transparency for their operations.
Gas Industry Company has begun an investigation of the issues. Its focus: Whether current market, commercial and regulatory settings that provide for gas availability and flexibility are fit for purpose in supporting the transition.
The project was initiated by the Minister of Energy and Resources, who has asked in a letter:
- how current contractual arrangements, including tendering processes, affect overall availability and flexibility of gas supply
- how current market, commercial and regulatory settings:
- support security of supply in the electricity market (particularly during periods of heightened demand), and
- provide major gas users with sufficient certainty/transparency about gas supply for their operations,
and whether they are fit for purpose during the transition.
Related Documents
Developing
Gas Industry Company has released a Consultation Paper about the role of gas in supporting the energy transition and the fitness of current market, commercial and regulatory settings
The Consultation Paper has been developed following conversations with a wide range of stakeholders from across the gas and electricity sectors over the last three months. It reflects what we have heard and seeks feedback on whether we have understood the settings and issues correctly and if we have missed anything.
A report will be developed for the Minister after consultation and is expected to be completed in August 2021.
Key Areas
This Gas Market Settings Investigation Consultation Paper is about the role of gas in supporting the energy transition and the fitness of current market, commercial and regulatory settings.
Gas Industry Company is investigating the issues at the request of The Minister of Energy & Resources, who has asked for advice on gas supply in the context of New Zealand’s path to a net zero emissions economy by 2050, and the Government’s commitment to transition to 100% renewable electricity by 2030.
We commissioned Concept Consulting to produce the study “Gas demand and supply projections – 2021 to 2035” to to support our investigation.
A report will be developed for the Minister after consultation and is expected to be completed in August 2021.
The Consultation Paper has been developed following conversations with a wide range of stakeholders from across the gas and electricity sectors over the last three months. It reflects what we have heard and seeks feedback on whether we have understood the settings and issues correctly and if we have missed anything.
In our conversations, a number of potential next steps and solutions have emerged, which are also included for comment and feedback. Gas Industry Company has not yet assessed these and intends to consider and respond to them after the consultation.
Submissions closed at 4pm on Thursday 24 June 2021. You can read the submissions below.
Related Documents
Submissions
Gas Industry Co has released our investigation into the role of gas in supporting the energy transition and current market settings.
Gas Industry Co investigated the issues after the Minister of Energy & Resources asked for advice about settings in the natural gas market and whether they are fit for purpose for New Zealand’s transition to 100 per cent renewable electricity by 2030.
The report was developed after consultation with industry and has now been released. You can read it below.
Related Documents
Related Documents
Q&A
Why is this project being undertaken?
The Minister of Energy and Resources wrote to Gas Industry Company and requested a report back. She
noted that New Zealand has a legislated emissions target and that the Government has committed
to 100 per cent renewable electricity by 2030. The Minister's concern is to ensure that current market,
commercial and regulatory settings that provide for gas visibility and flexibility are fit for purpose in
supporting the transition.
What’s happening in natural gas markets?
Total gas production in 2021 is expected to be around 150-160 PJ, compared with around 190 PJ in 2020.
Reduced gas in 2021 is the result of two factors occurring together:
- delayed field development due to COVID-19
- reduced availability from the Pohokura field, which has been signalled well in advance.
In December 2020, producers announced that they anticipate production from the Pohokura gas field in 2021 will be in the order of 39PJ, which is significantly less than it produced at its peak. The Pohokura disclosure was commendably early, and above and beyond existing disclosure requirements. The announcement provided energy markets with considerable forward notice to prepare for the 2021 forecast reduced volumes. Production from Pohokura exceeded 200 TJ per day at its peak. So far in 2021, production has dropped to around 130 TJ per day. By way of comparing the energy value of the production decline, the Tiwai smelter has been using around 48 TJ per day (13.5 GWh) of electricity. Partly due to the reduced production quantities, some industrial users have experienced a tighter market this year.