The draft New Zealand Energy Strategy (NZES) – which barely mentions natural gas and says all new electricity generation should be renewable wherever possible – could actually lead to an increasingly weak gas sector, GNS senior hydrocarbons scientist Richard Sykes told the conference.
“New Zealand can ill-afford to lose explorers the calibre of Swift Energy,” he said, referring to the US independent’s review of its New Zealand activities and a possible exit from the country.
Genesis Energy upstream manager Alan Melhuish agreed.
“The government preference for renewables could detract from gas exploration potential and neutralise the present incentives for gas exploration through to 2009,” he said.
“It [the NZES] provides explorers with no degree of certainty regarding New Zealand’s gas markets. [Under the strategy] it’s unlikely that New Zealand will be an attractive investment destination for petroleum explorers.”
Melhuish said that despite recent gas finds and developments, a gas supply shortfall was still likely to hit New Zealand about 2015.
Combined cycle gas-fired power stations were likely to still require gas 20 years from now.
“Genesis believes the government should explicitly encourage gas exploration; natural gas provides the bridge to a renewable future,” Melhuish said.
He argued the government should not try to reduce the current eight million tonnes per annum of carbon dioxide emissions to only 300,000 tonnes or so by 2015 by phasing out coal and gas-fired power stations and increasing reliance on renewables.
Melhuish said a business-as-usual scenario would see the 8Mt of carbon increase to 10Mt by 2030, but Genesis’ proposal would see that amount reduce to only 7.5Mt, by allowing new, more efficient gas stations to underpin expansion of renewables.
This would provide “long-term solutions to long-term problems, including climate change,” he said.
Another speaker, Methanex Asia-Pacific senior vice-president Harvey Weake, was critical of the government's favouring of biofuels over petroleum fuels.
"Biofuels are not a silver bullet for climate change," he said, arguing that some petroleum-derived fuels could also be very helpful.
Methanex produces methanol from natural gas feedstock, and Weake said global methanol demand was strong, with the commodity being used in a variety of applications - from bio-diesel, methanol blends with petrol, the petrol octane enhancer MTBE, and the synthetic LPG and diesel replacement fuel, dimethyl ether (DME).
China and Japan were leading the way regarding the use of DME as a transport fuel and China was also using methanol in a 15% blend with petrol, he said.
"If it's good enough for China, why not New Zealand?" Weake asked, referring to the New Zealand government's stated intention to have ethanol-only blends in petrol from 2012.
"New Zealand should ensure that it has biofuels and methanol blends, not just ethanol alone. Does the government want a prosperous oil and gas sector or not? Sometimes it appears not to."
