"The dynamics of gas exploration and utilisation are complex but if New Zealand is to achieve its desired growth goals it would appear that government will need to play a far more active role than is currently the case in incentivising and promoting new gas discoveries," says a Business NZ report circulated this week by the Petroleum Exploration Association of New Zealand to its members.
"It is increasingly clear that officials, rather than tendering independent advice to ministers, are instead generating analysis that supports a ministerial ideological view. This is likely to cloud and limit the effective operation of the governance arrangements and highlights the need for a mechanism that allows for a free flow of contestable advice," says environment and technology adviser Peter Whitehouse in the report.
While most industry commentators believe the best hope of replacing Maui lies in the on-going discovery of a number of smaller fields, Whitehouse believes a large offshore gas discovery would probably be developed for the international LNG market and not piped ashore.
"An investment climate needs to be fostered that sees those reserves developed with some urgency," he says, adding that the $NZ150 million the government had targeted for Contact Energy to build the distillate-fired reserve generation plant at Whirinaki could have been used to encourage such development.
The business community should also be worried about New Zealand relying on imported LNG as that would "almost certainly guarantee" the demise of local exploration efforts", he said, echoing recent remarks by Indo-Pacific Energy chief executive Dave Bennett.
Whitehouse said LNG would tie the economy to a global pricing framework and lead to long-lasting strategic disadvantages. "Committing a small economy like New Zealand to such a long-term arrangement can only be viewed as a negative move.
"New Zealand has substantial underdeveloped indigenous energy resources, most of which would deliver electricity under the price of imported LNG. Changing policies to remove the impediments to some of those resources is a far preferable option than a reliance on an expensive, imported generation fuel."
It was clear renewables would play a far larger role in future energy supplies, but there was a substantive transitional phase to be gone through before that larger role could be achieved.
Therefore all available indigenous fuels and technologies for electricity generation should be fully evaluated. Gas, coal and geothermal had the potential to make major contributions to New Zealand's energy future.
The small market of New Zealand, with its largely vertically integrated energy sector, needed some degree of regulatory oversight but not, through "regulatory "creep", a totally centralised control system. Regulatory barriers with no robust scientific foundation should be removed.
