February 2021
Pivotal year ahead for energy industry
Welcome to our first monthly newsletter for 2021. The PEPANZ team is already hard at work on what will be a crucial and pivotal 12 months for the wider energy sector.
Some of the key issues this year will include:
- The Climate Change Commission's recommendations to Government and the political response (see below).
- Phase 2 of major reforms to the Crown Minerals Act, which covers nearly every area of the upstream oil and gas industry.
- The Gas Industry Company (GIC)'s investigation into the security and certainty of New Zealand’s natural gas supply.
- The Infrastructure Commission's 30 year plan to be tabled in Parliament later this year.
- Reform to the Resource Management Act.
Our response to the Climate Change Commission
PEPANZ has been a leading voice in responding to the Climate Change Commission's draft advice this week, appearing widely in the media.
“While we don’t agree with every proposal, this is a thoughtful and nuanced report,” says PEPANZ chief executive John Carnegie.
“The Commission has recognised the role of natural gas in keeping electricity prices down for decades to come.
"However, it highlights a near-farcical scenario where we could import gas in the form of LNG from Australia, instead of developing our own resources and enjoying the jobs and royalties created.
“A 60% target for renewable energy isn’t helpful because we need to be focusing on emissions rather than fuel sources.
“A ban on natural gas connections would be very expensive to households and cost jobs while only having a very limited impact on emissions."
“It’s important we make good policy decisions in response because getting it wrong will be damaging and expensive to New Zealand."
PEPANZ has prepared a briefing note for members and supporters with our analysis - please contact us if you would like a copy.
Investigation into natural gas supply
A new investigation into the security and certainty of New Zealand’s natural gas supply has been announced by the Gas Industry Company (GIC).
The focus is on "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 and has been welcomed by PEPANZ.
“Natural gas is a vital energy source for New Zealand but there is real pressure on our long-term supply and no clear affordable alternatives ready yet," says John Carnegie.
“PEPANZ members are continuing to invest in their existing assets to enhance supply in the short and medium term, but beyond that exploration is required.
“These are important issues for the GIC to consider. We look forward to engaging with them and helping the Government ensure New Zealand has affordable, reliable and sustainable energy.”
Local exploration continues to dry up
Beach Energy and OMV have both decided to surrender exploration permits, dramatically shrinking the remaining offshore area available for exploration.
OMV has applied to surrender PEP 50119 in the Great South Basin, where Tawhaki-1 was unsuccessfully drilled last summer. It has also applied to surrender PEP 57073, a 9800 square kilometre block in the East Coast Basin.
In January a Beach Energy-led joint venture applied to surrender the PEP 38264 exploration permit in the offshore Canterbury Basin. This area contains the Wherry prospect which had been tentatively scheduled for drilling later this year.
The available area for offshore oil and gas exploration is now 21,600 square kilometres, having shrunk by 80% since April 2018.
Investigation into gas information disclosure
A draft proposal for the disclosure of gas production and storage facility outage information has been released by the Gas Industry Company (GIC).
The Draft Statement of Proposal: Gas Production and Storage Facility Outage Information seeks parties’ views on these issues.
These views will be used to inform the development of the final Statement of Proposal and will be relevant to potential recommendations for regulation in this area.
Decommissioning update
The latest draft decommissioning regulations have now been released by the Ministry for the Environment to a select group of stakeholders.
PEPANZ is disappointed there is still no definition of 'decommissioning', which means that our key concern remains unresolved.
The final date for submissions on these regulations is 12 March 2021. PEPANZ will be in touch with members to prepare our submission.
Media round-up
It's been a busy start to the year for New Zealand's wider energy sector. Here are some of the key stories in recent weeks:
*A call to ban new gas connections, supported by the Climate Change Commission. A response from PEPANZ is here.
*Todd Energy's plans for natural gas drilling in Taranaki.
*Winter electricity prices could spike over concerns on gas supply.
*Methanex to reduce production and idle Waitara Valley plant.
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