Some commentators have thought Hodgson’s stated preference for renewable energy over gas to be rather idealistic and not workable. However, he surprised them at the 2004 Gas Industry Reform Conference in Auckland last night by his commitment to the lighter side of petroleum.

“Gas has a lot going for it as part of a nationally diverse energy portfolio. We've already got the infrastructure and generating plant in place. That plant has high levels of reliability and flexibility, and gas is relatively efficient and clean compared to other thermal generation options.

“In short, while we are moving towards a greater diversity of generation sources, gas will continue to play a leading role for many years to come and on balance that is no bad thing,” he told conference delegates.

While commentators welcomed the apparent shift to include gas in this country’s long-term energy scenario, some wondered if this would also include coal.

“Does this signal that coal will not play a role? Is the government wondering which side of the bread to butter with regard to planned carbon charges? The Crown seems to be again weighing up security of supply against any additional costs to the environment,” one commentator told EnergyReview.Net today.

Hodgson said increasing the level of gas exploration over the next few years would reduce much of the uncertainty currently affecting the energy industry and, if successful, would also substantially contribute to the government’s sustainable development goals for energy. It was important to know the available options before the formerly giant Maui field was exhausted, perhaps by 2009.

Submissions on the draft Minerals Programme for Petroleum - which included reduced royalty rates for gas until the end of 2009 - had now closed and a program for extra seismic data acquisition was expected to be completed by the end of September.

“It is exciting to see the level of drilling activity occurring in New Zealand at the moment. A number of new wells will be drilled over the next year or so. Let's hope that some of these are successful,” he admitted.

The first quarter of 2005 should also see the implementation of an open access regime for the Maui pipeline, allowing non-Maui gas to travel from Taranaki to the energy-hungry Auckland and Waikato regions. “The Crown is watching progress very closely.”

Surety of access would also help to further stimulate investment in upstream exploration and development, Hodgson added.

Gas would also play a key role in helping New Zealand, and other countries, confront the challenge of peaking world oil production later this century. “We need to carefully consider what role gas might play in that transition, and how.”

Gas would also help in a “carbon-constrained future” because of global climate change.

“Restrictions on emissions globally will become stricter, and therefore more expensive, with time. This transition is coming, and it is in New Zealand’s strategic interests to be ready for it. In the future, being clean and green will be a competitive advantage.

“The sooner we gradually build a price for carbon into our economy, the more time we will have to adjust.”

Hodgson, who is also Convenor of the Ministerial Group on Climate Change, yesterday reported strong interest in his government’s second tender round of tradable Kyoto Protocol carbon credits. Tenders opened this week for the six million credits on offer and close on October 15, with the first successful projects expected to be announced before Christmas.