New Zealand Could Exhaust Natural Gas Reserves Within 10 Years

(Bloomberg) -- New Zealand has less than 10 years of natural gas available in its existing fields, raising questions about the security of future energy supply.

The nation’s proven and probable gas reserves fell 17% to 1,635 petajoules at the end of 2022, the Ministry of Business, Innovation and Employment said Thursday in Wellington. The decline reflects gas use of 145 petajoules last year plus revisions to estimated reserves, it said.

“Estimated gas reserves have now dropped below 10 years of remaining use for the first time, based on an average gas use of 200 petajoules over the last ten years,” the ministry said. Even though gas use is less than that, and declining, production is expected to drop below 2022 gas use in 2027, it said.

New Zealand is trying to curb the use of fossil fuels by subsidizing the take up of electric vehicles and the replacement of coal-fired boilers. The government banned new offshore oil and gas exploration in 2018 and it wants electricity generation to become 100% renewable by 2030.

The opposition National Party has pledged to lift the exploration ban if it wins the October election.

Currently more than 80% of power comes from hydro, wind and geothermal sources with the remainder largely gas-fired generation, which provides security when lake storage levels drop.

Gas “is a vital component in our energy mix and picks up the slack when weather-dependent renewables cannot get there on their own,” said John Carnegie, chief executive of Energy Resources Aotearoa, which represents gas explorers and users. “What affordable alternative renewable energy source at scale can possibly fill the gap now forecast to emerge in less than eight years’ time? Alarm bells should be ringing.”

The ministry said gas use fell in 2022 due in part to the mothballing of Methanex Corp.’s methanol plant, closure of the Marsden Point oil refinery and a decline in gas use for electricity generation due to favorable conditions for hydro.

It said future measures of reserves can be increased by converting so-called contingent reserves to proven reserves. However, there was also a 41% drop in contingent reserves in 2022.

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