“The amount of natural gas in New Zealand’s reserves has decreased by 335 PJ or 20% between 1 January 2023 and 1 January 2024, to 1300 PJ,” Hayward said.
He said 44% of this reduction is due to gas extracted and used over 2023.
The remaining 56% is a result of revisions to reserves figures from gas field operators.
Operators revise their reserves figures as they get a better idea of exactly how much gas exists in - and can be extracted from - their fields.
“This year’s revisions are split fairly evenly between downgrades to contingent resources, where operators believe the gas is there, but it’s too hard to extract (100 PJ), and revisions to existing figures, where operators believe there is less total gas than previously thought (88 PJ),” Hayward said.
New Zealand’s natural gas reserves have been steadily declining since 2019 and are expected to remain on this pathway unless there are new discoveries or innovation which enables commercially feasible production from contingent resources, Hayward said.
MBIE said limited gas supply is already impacting industrial users: for example, Methanex’s reported production at its Motunui plant was down 31% in the March 2024 quarter compared to the same quarter last year.
Of all the gas used in New Zealand in 2023, the majority was used by the industrial sector, either being burned for heat (35% of all use) or being used as a feedstock (26%) in factories.
Around 29% of gas use was for electricity generation, and the remaining 10% of use represented use by households, schools, hospitals, and other businesses.
Energy Minister Simeon Brown said MBIE’s report showed the need to reverse the oil and gas exploration ban, implemented by the last Labour Government.
“New Zealand’s exporters and manufacturers need more natural gas to power their businesses and produce value-added goods to drive economic growth, but natural gas production cannot currently meet demand,” he said.
”New Zealand’s insufficient supply of gas to meet demand is stifling economic growth and reducing our energy security.”
Brown noted natural gas plays a critical role in “firming” New Zealand’s electricity generation, particularly when intermittent renewable energy sources such as wind and solar are not generating.
The current coalition Government is in the throes of reversing the ban.
Energy Resources Aotearoa, which represents gas users and explorers, said investment in new exploration was needed immediately.
“MBIE scenarios count on gas-fired power stations to firm the grid when renewables can’t, but where is the fuel coming from?” Energy Resources chief executive John Carnegie said.
“The reserves data shows that its scenarios are unrealistic without immediate investment in new exploration,” he said.
Natural gas was essential in stabilising the electricity system as more renewable energy projects are built.
“Despite our highly renewable electricity system, over nine per cent of the electricity we use comes from New Zealand’s domestically produced gas,” Carnegie said.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
