Modelling analysis done by his firm McDouall Stuart Securities indicated that the importation of LNG, coupled with rising domestic gas prices and unreliable electricity supply, could cause NZ$3-8 billion worth of damage to the New Zealand economy.
Stone predicted that with LNG priced at the equivalent of NZ$10 per Gigajoule, and only limited renewable energy options available, wholesale electricity prices could almost double to an average of 8 cents per kilowatt-hour. Gas exploration activity levels would fall as there would be a smaller market for indigenous gas, though domestic prices would rise to be comparable with LNG.
Having to pay such high gas and electricity prices might force methanol manufacturer Methanex, aluminium company Comalco and other energy-intensive industries, such as forestry and pulp and paper, to completely close or severely downsize might not be able to compete internationally with such and would be.
Contrary to Todd Energy boss Richard Tweedie - who said media reports of New Zealand running out of gas were mischievous - Stone insisted this country was facing a gas supply crisis. "The hard decisions, which could have been started 10 years ago, have only just started happening.
"Industry still has many decisions to make and the government, until very recently, failed to take any leadership and not recognised the importance of the problem," Stone told EnergyReview.Net.
"To achieve the goal of sustainable energy supply at lowest cost, all players in the market need to pursue a more co-operative approach."
Ministry for Economic Development spokesman David Smol had earlier told delegates that he expected by the next conference, in 2006, the energy outlook would be brighter, with more discoveries and greater reliability and security of electricity supply.
Stone said that if Smol's brighter future eventuated then "I will still be in God's Zone, otherwise I might join others, companies and individuals, leaving the country and turning the lights out as they depart."
Last night Crown Minerals' Crown resources manager, Adam Feeley, took the unusual step of issuing a press release which acknowledged, that after two days of debate and discussion, "it is clear industry and regulators alike see a common need to act quickly to secure the future for gas exploration in New Zealand.
"There is little argument that we face time constraints; that domestic gas can play an essential part of New Zealand's energy equation; that we need to clarify its place with regard to other possible sources of energy. Whatever the energy mix, there needs to be a smooth transition to a more sustainable energy future."
Feeley said that, whatever the exact scale of the energy shortfall, "if we do not act to promote further exploration in the next 24 to 30 months, there is a real likelihood that indigenous gas will have a limited role to play in New Zealand's energy equation."
