Hurrah for coal – Shane Jones welcomes Genesis Energy’s import plans as natural gas production shrinks
A significant decline in natural gas production has given Resources Minister Shane Jones an opportunity to reiterate his enthusiasm for the mining and burning of coal.
For good measure, he has praised an announcement from Genesis Energy that it will resume importing coal.
He and Energy Minister Simeon Brown have blamed the previous government for the reduced gas supply and its troubling consequences for the energy sector.
Their concerns are expressed in a joint press statement after the Gas Industry Company released figures which show a 12.5 per cent reduction in gas production during 2023, and a 27.8 per cent reduction in gas production in the first three months of this year beyond what was projected.
Because of the significant reduction in gas production, the government has been advised that some large gas consumers are expressing concern about their ability to secure gas contracts, they said.
The statement is among those posted on the government’s official website in the past 24 hours:
Their concerns are expressed in a joint press statement after the Gas Industry Company released figures which show a 12.5 per cent reduction in gas production during 2023, and a 27.8 per cent reduction in gas production in the first three months of this year beyond what was projected.
Because of the significant reduction in gas production, the government has been advised that some large gas consumers are expressing concern about their ability to secure gas contracts, they said.
The statement is among those posted on the government’s official website in the past 24 hours:
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Energy Minister Simeon Brown and Resources Minister Shane Jones brought the shortcomings of the Ardern/Hipkins mob into their considerations when commenting on the significant reduction in gas production.
“The previous government stifled investment confidence in the natural gas sector. We are now seeing the serious impacts of these decisions with significant reduction in gas being produced which is leading to significant supply constraints and higher prices for consumers,” Mr Brown says.
And then the ministers brought coal into the picture:
“Reduced gas supply is forcing industrial users such as Methanex to reduce production. Less gas will also mean more coal will be needed to keep the lights on.”
The All-of-Government contract for reticulated natural gas is being negotiated by the Ministry of Business, Innovation and Employment.
This expires in September, and affects schools, tertiary institutions, and hospitals. Low production could mean higher prices and shorter-term contracts for these critical services.
“This is all a direct outcome of the last Government’s policy decisions which have disincentivised investment in gas production. This has seen a dramatic reduction in exploration for new gas resources since 2021, which would have brought online the gas supplies we now need. Maintenance drilling has also been suppressed, further reducing production from existing gas fields,” Mr Brown says.
Resources Minister Shane Jones says the low gas production figures are a hangover from the previous government’s policies that the Coalition Government will reverse.
“Gas supplies have fallen because of a long-term failure to invest, not because of some sudden, unexpected interruption to supply. Reduced gas production means reduced output from our manufacturers and exporters. It is a terrible threat to the economies of the regions where these industries operate and the jobs that they provide,” Mr Jones says.
“The Government will bring back investment confidence. We are working with the sector to increase production, and I will be introducing changes to the Crown Minerals Act to Parliament this year that will revitalise the sector and increase production.
“New Zealand has abundant natural resources, including energy resources such as natural gas. It is a tragedy to leave this abundance in the ground while our manufacturers suffer and our industrial base moves overseas. We are going to fix it.”
In response to this report, MBIE has stood up a Gas Security Response Group to coordinate gas producers, major gas users, and government agencies while supply is tight. The group will assess measures needed to make sure that gas supply is available for its most critical users.
Jones has been championing coal on other forums, after Genesis Energy announced it is to resume importing coal, as reduced gas supplies and increased demand add to the problems of keeping the lights on in future years.
RNZ reported Jones was welcoming the move, with investment in New Zealand coal fields still stymied by the 2018 exploration ban, saying Genesis “should be on the honours list”.
The company said it currently had about half a million tonnes at its Huntly power station, which it expected to be well through after this winter, but would then replenish to maintain a stockpile of 350,000 tonnes, enough to meet its own needs.
Chief executive Malcolm Johns said coal use was necessary as gas supplies were down a third on a year ago, hydro-lake inflows were 13 percent lower, and solar and wind power were intermittent.
In addition, demand had risen about 4 percent.
Jones hadn’t finished with his advocacy and – according to Newshub – stressed the importance of turning to coal on AM on Wednesday morning, .
“The gases in the ground sadly have been stigmatised in the last six to seven years, and we are going to rely increasingly on coal because of the uncertainty of gas,” he said.
“But we are going to get the key players together including Todd [Energy] and all of the electricity generators and get them to play good because we need certainty – not only for electricity prices but the gases in the ground,” he explained.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
1 comment:
A few questions that may need to be asked.
What will be the learnings from this experience?
Does critical decisions, like shutting down whole industries ,seemingly on the hoof, need to be taken away from politicians?
Energy policy in this country is a disaster.
Successive , ignorant decisions being imposed on the country like some game. It’s not a game Mr & MrsPolitician. Gas heats homes, schools, hospitals, hotels. Runs restaurants and major industries.
No gas, no jobs.
This is the Greens vision for NZ
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