Oil & Gas Regulation 2013

Chapter 24
New Zealand
David Coull
Bell Gully
Angela Bamford
1 Overview of Natural Gas Sector
1.1 A brief outline of New Zealand’s natural gas sector,
including a general description of: natural gas reserves;
natural gas production including the extent to which
production is associated or non-associated natural gas;
import and export of natural gas, including liquefied
natural gas (LNG) liquefaction and export facilities, and/or
receiving and re-gasification facilities (“LNG facilities”);
natural gas pipeline transportation and
distribution/transmission network; natural gas storage;
and commodity sales and trading.
Natural gas has been produced in New Zealand for more than 40
years and is a significant component of New Zealand’s domestic
energy market.
Natural gas provides approximately 19% of New Zealand’s total
primary energy supply. In 2011 gross domestic natural gas
production was 180 PJ (down 9% from the previous year). As of 1
January 2012, ultimate recoverable reserves (P50) from producing
fields were estimated to be 7,698 PJ, whilst remaining reserves
(P50) were estimated to be 1,999 PJ.
While direct consumption of natural gas by consumers is relatively
low, the natural gas industry plays an important role in the New
Zealand economy, providing fuel for electricity generation and
primary fuel for industry. In 2011, 46% of natural gas was used for
electricity generation (including cogeneration), 29.5% was used in
the industrial sector, and the commercial sector and residential
sector each accounted for around 4% of total gas consumption.
Since the release of the Petroleum Action Plan in 2009, the
Government has continued to take steps to help realise the potential
of New Zealand’s petroleum resources and is implementing a
number of regulatory changes to encourage investment in New
Zealand’s oil and gas sector. In particular, the Government is
visibly keen to implement regulatory change in New Zealand to
increase New Zealand’s attractiveness for international capital and
to capitalise that into greater exploration over the extent of New
Zealand’s substantial available acreage. There are 5.7 million
square kilometres of seabed that New Zealand has sovereign rights
over, with New Zealand having the fourth largest exclusive
economic zone in the world, and 15 recognised basins which are
potentially capable of producing hydrocarbons.
New Zealand’s natural gas is entirely indigenous and is sourced
from the Taranaki basin. There were 17 fields that produced gas in
New Zealand in 2011, with the Pohokura, Maui and Kupe fields
responsible for the bulk of such production. New Zealand does not
export natural gas and does not currently have any LNG facilities.
Natural gas is transported through more than 3,500 km of high
pressure pipes to feed in excess of 2,800 km of intermediate,
medium, and low pressure distribution networks throughout the
North Island of New Zealand. The high pressure networks are
owned by Maui Development Limited (MDL) (being the owner of
the Maui Pipeline) and Vector Gas Limited (Vector) (being the
owner of the Vector Pipeline). These pipelines connect the gas
fields of Taranaki to the major load centres of the North Island.
New Zealand’s first underground gas storage facility was recently
developed by Contact Energy Limited at the depleted Ahuroa
reservoir in Taranaki.
1.2 To what extent are New Zealand’s energy requirements
met using natural gas (including LNG)?
New Zealand’s energy requirements are met by various means, but
are predominantly met by oil, followed by gas and geothermal
energy. In 2011, the total primary energy supply (calculated as
domestic production, plus imports, less exports and energy used for
international transportation) in New Zealand (in gross PJ) was as
follows:
Oil: 276 PJ (34%).
Gas: 159 PJ (19%).
Geothermal: 159 PJ (19%).
Hydro: 90 PJ (11%).
Coal: 61 PJ (7.4%).
Other renewables: 71 PJ (8.6%).
In 2011, renewable energy made up 39% of New Zealand’s total
primary energy supply, which gives New Zealand the second
highest contribution of renewable energy to total primary energy
supply in the OECD.
New Zealand does not currently import LNG. Genesis Energy (a
State-owned enterprise) and Contact Energy are partners in a joint
venture known as Gasbridge, which had planned to make
preparations for a LNG import terminal at Port Taranaki to preserve
the option of importing LNG, if, in the future, there is a shortage of
domestic natural gas. The Gasbridge project may be revisited in the
future if there is a need for these facilities.
1.3 To what extent are New Zealand’s natural gas
requirements met through domestic natural gas
production?
Natural gas used in New Zealand is entirely indigenous. Some LPG
is imported.
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