Pepanz executive officer John Pfahlert said from the Wellington the ban would mean a much restricted market for future gas discoveries and lead to a long term decline of the local oil and gas industry.
The New Zealand petroleum sector employs, directly and indirectly, about 8000 people and contributes about $NZ1.6 billion per year to the nation’s economy. In the Taranaki region, about 3000 people depend on the industry, entirely or in part, and it contributes a total of $NZ1 billion to the Taranaki economy.
“I believe we are the first country in the world to ban new gas-fired power stations,” Pfahlert told PetroleumNews.net from Wellington today.
“What sort of signal does this send explorers contemplating coming to New Zealand?”
He said there would always be a market for liquids, crude and condensate, but not necessarily for gas.
New Zealand’s two largest gas users are integrated energy players Genesis Energy and Contact Energy and their gas-fired power stations can consume up to 40% or so of gas used by the country each year, about 150-170 petajoules (PJ), particularly if fossil-fuelled stations are needed to compensate for low hydro lake levels during dry, cold winters and high electricity demand.
The government last Thursday launched the New Zealand Energy Strategy (NZES), which included an effective ban on new gas-fired power stations built during the next 10 years. Electricity generated from coal or gas will also cost more as generators face the cost of a carbon emissions trading scheme, likely to be about $NZ25 per tonne, from 2010.
“It is ironic that the energy policy, with its crackdown on the use of natural gas for power supply, came only weeks after the government warmly welcomed evidence of interest from companies in exploring and developing potentially large oil and gas reserves in the Great South Basin, with accompanying major economic development benefits for Southland and the country as a whole,” Pfahlert said.
He said large GSB discoveries, or significant finds in other frontier basins, could always be exported.
But Pfahlert said he was worried about onshore explorers, particularly in Taranaki, if there was no likely long-term market for new gas. While methanol manufacturer Methanex might take additional gas for its Waitara Valley plant, this was not certain.
“This (ban) must affect the desirability of New Zealand as an investment destination for exploration companies,” said Pfahlert.
Energy Minister David Parker has said the GSB explorers were aware of the likelihood of the ban when they applied for that acreage last year. He also said the commissioning earlier this year of the new Genesis plant known as e3p meant New Zealand was using more gas, not less, than it did last year.
