Gas

Description

Background and history

Gas is an important source of energy, for electricity generation, direct home use and industrial production. This section focuses on the infrastructure that supports the production and transmission of gas.

The Kapuni gas field in Taranaki, discovered in 1959, was the first commercially viable find in New Zealand. In 1969 a pipeline was constructed from Kapuni to Auckland and Wellington. This has now been extended as far as Gisborne and Hastings in the east and Kauri in the far north. In 1969, the major Maui offshore field was discovered.

Following development of the Maui field natural gas became an important fuel for residential, commercial and industrial uses. The gas infrastructure networks deliver natural gas to approximately 260,000 consumers. In particular, it became a large resource for electricity generation and the petrochemical industry. The availability of cheap Maui gas had also a major influence on power prices. Recent power price increases reflect, in part, the decline of the Maui field.

The gas industry comprises:

• Fields
• Producers
• Wholesalers
• Transmitters
• Distributors
• Retailers, and
• Consumers.

Assets

Production

There are currently 14 fields that produce gas in New Zealand, all in the Taranaki region, with production dominated by the Pohokura (40.6%) and the Maui (29.8%) fields, as shown in the following graph.

Figure 32: Gross gas production by field for 2008

Source: Ministry of Economic Development: New Zealand Energy Data File 2009

Note: 

1. Rimu/Kauri includes the Manutahi well.        

2. Kaimiro/Ngatoro includes the Goldie and Moturoa wells.        

3. Other includes the Tariki/Ahuroa, Waihapa/Ngaere and Cheal fields, and Surrey well.

Transmission and distribution

There are more than 3,400km of high-pressure gas transmission pipelines in New Zealand. Distribution networks transport gas from transmission pipeline delivery points and reticulate it into residential houses, offices, hospitals, factories and other businesses. There are more than 2,800km of intermediate, medium and low-pressure distribution pipeline networks in the North Island.

Institutional arrangements

Shell and Todd Energy-owned subsidiaries control the majority of the gas production market. The natural gas industry in New Zealand has undergone considerable reform and restructuring since the mid 1980s. In 1992, a new Gas Act deregulated the gas sector, abolishing exclusive area retail franchises for gas utilities and price controls on gas.

The impending depletion of Maui gas[87] and transition to future reliance on a wider range of gas sources, environmental and sustainability requirements, the need to facilitate competition, and a desire to establish a fair and open industry governance framework led to a government review of the sector in 2001.

This resulted in the establishment of the Gas Industry Company. This is a co-regulatory body which can make recommendations to the Minister of Energy on a wide range of industry matters, including the making of rules and regulations regarding the wholesaling, retailing, transmission, processing and distribution of natural gas.[88]