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.