Anyone remember it was just a year ago that businesses and government politicians were crying about the loss of natural gas availability?
The Business NZ Energy Council has been warning a gas shortage could lead to business closures.
Business NZ Energy Council executive director Tina Schirr said the biggest concern for gas-using businesses over the last couple of years was securing long-term contracts and the rise in gas prices.
Catastrophists like Geoff Smit at DETA were not only worried that the world was about to end, but also that the free money the government’s 2026 budget was handing out to transition away from gas wasn’t enough:
New Zealand’s industrial sector is facing a genuine energy crisis – one that’s been building for years and is now arriving faster than most businesses planned for. Gas fields are declining. Supply shortfalls have been experienced already, and now are forecast to increase in 2027 and 2028. And businesses that built their operations around natural gas are facing a future where that fuel is scarcer, more expensive and increasingly hard to justify.”
Even yesterday, the energy mining lobby was whining about how this massive new gas volume availability was bad for them and Jacinda was actually still evil.
Not to be outdone in the pearl-clutching foolishness, MBIE bought into the industry bullshit by this year hyping a massive LNG port in Taranaki and getting it through Cabinet:
LNG will provide a reliable back-up fuel source to manage dry year risk, help stabilise electricity costs, and address New Zealand’s declining domestic gas supply. Having access to LNG in New Zealand is expected to deliver savings of upwards of $265 million per year by reducing electricity price spikes and lowering the risk premium that is currently built into power bills.”
But now we find that the real cause of the scarcity of gas was the Canadian Methanex plant which, now that it has about to close, has magically made available bounteous volumes of natural gas for the same New Zealand businesses who told us the world was ending and it was all Jacinda’s fault for stopping new oil and gas exploration, for years on end.
No one in business or in government was prepared to say that New Zealand’s remaining natural gas supply was obviously being choked off by a Canadian company who simply had a long historic contractual right to it.
And we also find that, surprise surprise and completely unrelated on the same day, Genesis Energy has now secured all the gas it could possibly wish for.
This acquisition changes the strategic outlook for the Genesis Huntly Power Station and the corrupt cartel of generators who got the Commerce Commission to agree to stoke it with coal forevermore. Genesis had recently been reviewing the potential offshore sale of its 400 MW Unit 5 gas turbine due to shrinking domestic gas roles. Having guaranteed fuel makes maintaining flexible units at Huntly structurally more viable, which aligns with the Energy Minister’s preference to keep the turbine in New Zealand.
Genesis instigated the coal cartel to the Commerce Commission last year, and now at the drop of a hat and without apology everything is fine.
There is no doubt there is no equivalent Taranaki employment for those at Methanex who will lose their jobs. Agree that is tough. To be really honest those who can on that scale of gas industry salary for so many years will retire, and others will quickly relocate to the Australian and Kazakh fields, as has been long common practice.
The Business Energy NZ Council hyping up the apparent cataclysm of gas loss, should actually have pointed out that the best way to solve the gas scarcity was to kill off Methanex.
So Methanex have just exposed that logic: perversely, just one business failure solved everything. It would have been so good if any of those cowards on that Council had spoken up about the Methanex stranglehold when throughout 2024, 2025, and 2026 our gas powered mills just died and took the workers and families of whole small towns down with them.
But no apparently the fault was apparently Jacinda.
Every single one of the businesses, politicians, and public servants who manufactured this crisis and manufactured massive solutions to solve it, has been talking straight lies.
What is actually going on in this country ???
Can anyone tell the truth or give us some accurate information. ???
Lying and misinformation seems to be viral these days ???
Top work Ad,
Hipkins should offer a billion in subsidies for renewables (especially with grid scale battery storage) over 4 years and again rule out the LNG import project.
The Methanex news is a gift.
The last Labour government had a big fund to shift heavy users away from coal and gas, and they had good results.
But they got no thanks for it from anyone. Why bother again?
Ad-because it's the right thing to do?
But the political climate has changed significantly since the days you refer to. The Iran war, and technological advances, have made many people realise that solar is now a genuine (and cheaper) alternative to fossil fuel.
Many people are now going electric-residential solar, EV's, EBikes.
This means Labour' s involvement in facilitating this process will be much more favourably received these days. Just look at Australia.
Imagine NZ roads with no petrol tankers on them.
I used to read those old Shell global energy scenarios when the world looked more hopeful (sigh).
Solar Zero is still a very big blot on any state support for domestic solar: it wasn't just BlackRock pulling out, it was basic unprofitability. But you are right solar still the most likely place to see citizens being able to take back some of their energy autonomy.
I'm not high on enthusiasm for structural shifts in NZ energy currently.
Nope.
Gravity, pumped hydro, storage costs a fraction /kwh of chemical storage, has an operating life measured in mutiple generations rather than decades and comes with the inertial response capacity that chemical storage lacks.
https://en.wikipedia.org/wiki/Inertial_response
No one will have a pumped hydro system in New Zealand for the next decade.
If ever.
Any hydro scheme worth it's salt takes >40 years from inception to completion.
Best of luck with pumped hydro wherever you wish it, but I suspect Bearded Git is right that BESS+solar is already implemented and we will see a lot more of them at an even larger scale:
https://www.meridianenergy.co.nz/new-projects/ruakaka-energy-park
Methanex's gas consumption vs available supply has literally never been a surprise. It only takes someone to put two and two together…
The fact that you are "surprised" by this speaks more to yourself than the mainstream News outlets…
https://www.gasindustry.co.nz/data/resources/gas-production-and-consumption/
We said Ad. Sick of this cowardly politics from so many on the right – to confront the problem of monopoly/monopolistic player.
Maybe this rings a bell?
https://thestandard.nz/simeon-brown-peddling-porkies-about-gas-shortage/
Yes, good one – if you look at the end of the OP, you’ll see three Related Posts and yours is one of them
The field supplies gas for a few more years only, Methanex pulled out to sell the gas rights.
Two options – until there is replacement imported gas, or otherwise.
Genesis bought the gas so it can supply to users (those also planning to move onto biomass).
Genesis has been planning to replace use of coal at Huntly with biomass – for use in dry hydro years.
Meridian has got permission to swimming pool at Lake Pukaki to create a larger contingency for a dry year.
Government subsidy for biomass development removes the need for imported gas.
https://thestandard.nz/open-mike-02-09-2026/#comment-2071481
https://thestandard.nz/open-mike-03-09-2026/#comment-2071555
https://www.rnz.co.nz/news/environment/597335/green-light-for-plan-to-take-extra-water-from-lake-pukaki-for-3-years
Offshore Taranaki is a an example of the waste of an economic resource.
Then the plan for iron-sand mining the seabed disrupted plans for offshore windfarms.
Now it is plans to subsidise exploration of small gas field pockets (while building a terminal and importing expensive gas).
They could have had power from wind farms to generate supply of power for local economic development.
I think the more interesting story here is not simply that Methanex has suddenly freed up a lot of gas.
It's that the market keeps sending the Government fairly obvious signals about where the energy system is going, and the Government keeps trying not to hear them.
Industrial users are extremely sensitive to both price and uncertainty. Whatever happens with exploration from here, gas has already become a much less attractive long-term proposition for anyone making a major capital investment. If you're buying plant with a twenty-year life, "we might discover some more gas, otherwise perhaps we'll import LNG" is not a particularly reassuring fuel strategy.
So businesses are doing the rational thing. They're looking harder at electrification, efficiency, renewable generation, onsite solar and other ways of reducing their exposure to gas.
Generation investment is moving in much the same direction. More renewables are being built. Solar and distributed generation are expanding. Batteries and other forms of flexibility are becoming increasingly important. None of that depends on another giant gas discovery turning up off Taranaki.
And now Methanex itself is responding to exactly the same economics. A very large, gas-intensive industrial user no longer stacks up, so it exits. Its contracted gas becomes available to other users, including generators for whom gas still has considerable value as a flexible fuel.
That looks remarkably like a market adjustment working as intended.
Gas becomes scarce and expensive. Marginal uses fall away. Capital shifts towards substitutes. Remaining supply is progressively concentrated in uses where it has greater value.
The Government's problem is that it seems ideologically committed to markets right up until the market starts telling it something it doesn't want to hear.
Rather than recognising that New Zealand may simply be moving towards an energy system with less gas, it keeps trying to preserve the previous equilibrium: new exploration, LNG, coal at Huntly, and various interventions designed to maintain the economics of the existing thermal system.
Meanwhile the market is quietly getting on with the transition anyway.
That doesn't mean government has no role. Quite the opposite. It needs to make sure enough electricity generation gets built, that transmission and distribution networks can support electrification, that security of supply remains adequate, and that workers and communities aren't simply abandoned as old industries disappear.
But those are policies for managing a transition.
They are very different from repeatedly trying to persuade the market that the transition isn't happening.
Methanex may therefore be less the solution to the gas crisis than another fairly large message from the market about what the future of New Zealand's energy system actually looks like.
I'm not sure the Government is listening.
It seems the government is addicted to a pro carbon ideology of a bygone era, rather than in accord with progress in the marketplace.
Which is odd, for a government comprised of two very strongly pro-market parties
I think I've pointed out that the state as owner (Gemesis), state as regulator (Commerce Commission), state as market maker (privatisation of Methanex), and state as policy maker and subsidiser (LNG Port) whether to slow or fast transition, form a pretty much codependent relationship with each other and to industry users. And have done so in Taranaki for over 50 years.
So there is no shortage of state engagement or heft displayed.
But it's the extra parts of the state that need to work are the parts that are reacting the least:
– not shifting employment pathways towards higher skills,
– not actively encouraging higher productivity industry in Taranaki,
– not concentrating effort on the most damaged strata of Taranaki namely Maori long stripped of assets both in the 19th century and in the 1970s through Think Big
– doing very little for local government economic diversification efforts in this century when it was so clear the petroleum industry was rapidly receding
– returning none of the royalties the state had received back to the locals
– and of course under this government actively chasing away utterly massive offshore wind farm investment by promoting offshore seabed mining
It is not a matter of government not listening. The government has listened, responded with rebuke, and have actively pretended and extended the dull rich hand of petroleum while suppressing or starving the alternatives.
Of course the state plays a role in regulating and shaping the energy market: through the Commerce Commission, the Electricity Authority, Transpower, the SOEs and its broader role as policymaker and regulator.
I'm not arguing for some mythical free market.
But the interesting thing is that all of those organs of the state have reasonably clear and legible plans for a fast(ish) transition towards an electricity system far less dependent on fossil fuels.
And that hasn't primarily happened because Cabinet told them to. It's happening because of the actual economics of energy and what their customers are telling them. Generators are investing heavily in renewables because the economics stack up. Industrial customers are electrifying because gas is increasingly expensive and uncertain. The system is responding accordingly.
Methanex leaving is another part of that adjustment. A huge gas user exits, its gas becomes available to other users, and Genesis promptly secures some of it.
What seems increasingly disconnected from all of this is Cabinet.
Rather than listening to the fairly obvious signals coming from the market and the energy sector itself, it appears determined to foist the wrong solution onto the wrong problem by attempting to preserve gas through LNG and other interventions when the sector is already investing its way towards needing less of it.
So yes, I agree that the state has enormous heft here.
My criticism is that Cabinet seems determined to use that heft to resist the transition that the rest of the system is already getting on with.
https://www.youtube.com/watch?v=y8tAx-itHUc How greed is turning Spain into a desert DW Planet A 15.26m
Spain is Europe's greenhouse. Vast, plastic-covered fields dominate its southern coast to produce up to 25 percent of Europe's fruit and veg. But this has a price. Spain is experiencing its worst water crisis in history, with thousands of illegal wells drilled to irrigate farms aggravating the problem — all for cheap, year-round produce for the richer countries up north. #PlanetA #Spain drought #illegal wells #water crisis #groundwater depletion
This is our world now. NZAO has seen our water polluted and artesian water drawn on foolishly with science dismissed while the sorted at the top have been given political power by ignorant voters and tunnel-visioned, stupid leaders and politicians etc.
Stopping this MAY lead to bloodshed, but certain inconvenience for many (already suffering such), and a loss of living standards, less if a large majority accepted the need to scale back; but like fighting over the estate when daddy dies there will be a strong hold-out and a 'me,me' insistence on desisting. We have to enlist to desist and persist in The Resistance. 'War of the World'. Perhaps we should watch, I haven't yet, HG Wells War of the Worlds' scifi classic, with a modern retelling. https://www.youtube.com/watch?v=fyiY68aHedw
The unceasing greed and callous disregard for responsible 'husbandry' of the resources we need eg water shows up in startling example in Spain. It occurs to me that Trump is enabling this disastrous behaviour while he carries out his wet dream of total volatility, and the USA forever ruins the lingering respect for nobility in the world.
Advantage…You couldn't be more wrong. The closure of Methanex will free up about 11 PJ of gas over three years – a tiny volume. Methanex will shut about the same time the Maui field will shut – and it produced about 17 PJ of gas last year. NZ used about 102 PJ last year, so Maui's closure is going to be quite a loss. Five years ago the country was using 180 PJ a year. Since then we have shut two of Methanex's three production chains, the Marsden Point oil refinery, the Te Rapa co-generation plant, and the 370 MW Taranaki Combined Cycle power station. The gas scarcity has also flowed into higher power prices, which have contributed to the closure of Winstone Pulp, paper machines at Penrose and Kinleith, and a handful of saw mills and food processors.
I agree about the effect – Methanex has run the old use it or pay for it stupidity of the original exploration to a dry hole. Essentially NZ wasted the current gas fields for little return.
However I’d also argue that there is absolutely no point in putting in a LNG facility as ‘a emergency dry year electricity gas backstop’. NZ hasn’t found a significiant new viable gas field in more than 30 years. They have eked out a few pockets attached to existing fields.
Our geology tends to indicate that there isn’t a large field that is likely to be economically viable and get it into production in a minimum of 15 years – if only because if one is found it will be hundreds of kilometres away in the sunken regions of the Zealandia continental plate. Technically possible. But hugely expensive.
Having a gas backup will only encourage the electricity ‘market’ to keep pricing power according to the most expensive producer – which would be LNG at full cost, including storage. If they do that at their cost, then that is fine. Reduce the dividends. Otherwise it is just a tax on all consumers for teh benefit of a few corporates.
Basically a LNG facility is just a boondoggle for the gas consumers. If there were stupid enough to not read the basic economics and geology decades ago and adjust, well frankly that is their problem. I don’t want to pay for their stupidity. If we have industries that are strategic, cement comes to mind, then nationalise them and force adaption to more accessible and cheaper forms of heat. Think of NZ Steel and their adoption of electric smelting.
By the time one is found, the gas industry would have had their LNG boondoggle up and running for decades. With continual pleas of keeping it funded and running while providing cheap gas for ‘economic’ reasons. It will have fleeced taxpayers and consumers out of monumental amounts of subsidies for the benefit of a very small group. Virtually no business or even residential use could afford the true cost of importing gas
The whole Maui/Kapuni and other minor fields has been a nett drag on the economy since the 1970s. Time to let it die.
We’re pretty close to having a completely non-thermal electricity network. I suspect that if the Electricity ‘market’ put a penalty on the substantial profits of the generators for not having sufficient supply available at all times, we’d have the dry year gaps filled in extremely fast. For instance with more robust agreements about large industrial consumers powering down if there are shortages.
Just don’t let Shane Jones near the negotiating table. Incompetent as well as useless.
How many and whom – have we politicians that are not 'incompetent as well as useless'? (Also destructive of what we have or could have had with practical planning for good forecasts of outcomes?
Resources – energy – electricity prices Oz – solar power, gas, batteries – this item has everything.
youtube Engineering with Rosie. 3.42
https://www.youtube.com/watch?v=jltRq_KlGH4 Australia killed the duck curve (with batteries)
If renewables are so cheap, why hasn't your power bill reflected that? Well, actually, now it is. From July this year, electricity prices are dropping for most Australian households and small businesses. But the more interesting question is why it took this long, and what actually changed. To understand that, you need to know about the duck curve,…
That is brilliant Grey. Thank you.
At last a nice simple video that even Simeon Brown could understand. Somebody should show it to him. Hipkins should see this too-he should propose using the $2.7 billion LNG imports are going to cost for grid-scale battery incentives.
Go grid-scale batteries-they are the solution and the technology is perfect for NZ. No more dry year worries….with grid-scale and residential batteries we can save a significant percentage of the water in the hydro lakes for when it is needed and so smooth its usage. Power prices will fall.
Go the platypus…f*ck the duck.
If only it were that easy…
Batteries and DER are absolutely part of the answer, but speaking as someone who works in the distribution sector, we're still figuring out how the hell to make all of this work properly at scale.
The issue isn't just buying batteries. It's everything around them: network visibility, hosting capacity, two-way power flows, connection standards, control systems, data, flexibility arrangements, and deciding who pays for the infrastructure needed to support it.
Our networks were largely built for one-way flows from central generation to passive customers. DER turns that model on its head.
We can absolutely build a much more distributed, flexible electricity system, and the sector is already moving that way. But it requires a lot of investment and a lot of fairly unglamorous engineering and market-design work.
Which is why I find the LNG proposal so frustrating. The real question isn't "LNG or blackouts". It's whether billions spent preserving access to imported gas gives us better long-term value than investing in the electricity system we're already having to redesign anyway.
Batteries are part of the answer. They are not the answer by themselves.
Fair enough Res. You know far more about this than me.
But Australia have made it work. And, from what you seem to be saying, it could be made to work over here if, instead of spending $2.7 billion on the LNG import plant (Bernard Hickey's estimate) we should instead divert this amount into " a much more distributed, flexible electricity system" as you say.
Incentives for both residential and grid-scale batteries might also play a part.
Sounds good BG – a keen. effective, far-seeing and reliable government would look on this with favour, check it out and implement it. What a pity that we haven't a government that matches the above description.
James McNeish spent some time in Sicily in the 1960s I think. They had an impervious controlling body that did little for the poor people. An Italian from the middle class, an architect, came to visit and saw a child die of starvation. He took on the role of stirrer and activist to improve things.
I think the Italian was jailed for organising a work gang of the unemployed to go out unpaid and repair the roads. Not allowed. (We in Nelson are not allowed to weed our own roads because the Transport Dept says it is unsafe, it is their business.) The Italian, Danilo Dolci, noted that there was a wet and dry season and went on a hunger strike to pressure authorities to get a dam built to alleviate the dry season severe problem. It was eventually built. (Now they are affected by climate change and short of water again.)
People in power seem to lose their mental acuity, the feeling of being human and part of the mass of humanity. They like power and money and being voted in where they can get it. Why don't we simply pay on contract? That would be more businesslike – presently these wily ones are using our governing process against us – rorting us. We could get one necessary thing done right, to budget plus 10% for mishaps, then choose another person who will manage another single project? The day-to-day stuff gets handled locally mainly by older and proven wiser, citizens. That's rather like Maori wanted to do originally. Perhaps they were right all along?
Shane Jones – Mr She'll be right.
From NZ Geographic Newsletter. The Weekender Sep.4/26
For years, Aotearoa’s depleted and closed-down scallop beds have been the cautionary tale I reach for when trying to explain what happens when you take, and take, before properly understanding what you’re harvesting.
Kate Evans and Richard Robinson spent months reporting that story for our latest issue. Four days after the magazine went to press they were staggered to hear that Minister for Fisheries Shane Jones is proposing to open Whangārei Harbour’s scallop beds to a limited amount of recreational fishing.
In his press release, Jones said the proposals were based on recent surveys continuing to show good numbers of scallops in the harbour. James Williams, the Earth Sciences New Zealand scallop specialist in our story, is the scientist who analysed that survey data—but even he had no idea reopening was on the cards. Williams says the Whangārei population contains some of the only high-density scallop beds we know about between North Cape and the Bay of Plenty; “so we don’t want to wreck it.”…