Gas supply and demand
Natural gas makes a significant contribution to New Zealand’s energy mix and to the economy. It underpins electricity supply security, supports a substantial petrochemical manufacturing sector and is used by many export industries and over 266,000 consumers.
Gas supply and distribution
Gas in New Zealand is produced from 15 fields, all within the Taranaki region. The Pohokura and Maui fields dominate production.
Gas is transmitted by 2 open access, high pressure transmission pipelines to virtually all regions of the North Island, and then delivered to the majority of consumers through lower pressure local distribution networks.
The 2 transmission pipeline systems are owned by First Gas Ltd. Open access distribution networks are owned by First Gas, Vector, Powerco, and GasNet, while Nova Energy owns a number of small private pipelines.
Owners of open access gas pipelines are required to publicly disclose certain prescribed financial and other information under Information Disclosure Determinations introduced in 2012 and administered by the Commerce Commission.
Gas demand varies from year to year, reflecting primarily demand from the 2 largest users – petrochemical producers and electricity generators. Gas demand for electricity generation, in particular, fluctuates according to hydro water levels and the availability of other renewable forms of generation, such as wind.
Growth in geothermal generation capacity in recent years has seen decreasing use of gas-fired generation, with these stations taking on more of a peaking, rather than baseload function. Of the gas used in 2016:
- 26.5% was used to generate electricity
- 14.8% was used by the industrial sector
- 51% was used by the petrochemical sector (to convert gas to methanol and ammonia/urea)
- 3.5% percent was for residential use
- 4.2% percent was for commercial use.
With no cross border connecting pipelines with other countries, or Liquefied Natural Gas (LNG) importation terminals, the New Zealand gas market is completely isolated from the rest of the world.
Gas prices in New Zealand have been much lower than other parts of the world, however this margin has narrowed in recent years, due to:
- declining Maui reserves, which initially had a sub-inflation price escalator
- higher-priced gas from new fields including Pohokura and Kupe
- the expiry of the Maui legacy contract in June 2009 and an associated move by Maui gas to higher market prices.
Gas Industry Co has published an independent study of future gas supply and demand scenarios, which you can read below:
Gas supply and demand(external link) — Gas Industry Co