Analysis: For over a year, since the Government was forced to rustle up $200 million in a desperate bid to attract new oil and gas development to New Zealand, ministers have been denying the obvious: Domestic gas is dead.
In a real-world re-run of the famous Monty Python dead parrot sketch, ministers from Shane Jones to Simon Watts to Simeon Brown have insisted the gas industry is, in fact, “just resting”.
Never mind that firms have spent more than $2.1 billion since 2019 looking for new gas or developing existing fields with little to show for it. Never mind that renewables are now far cheaper sources of energy than unreliable gas. Never mind that estimates of reserves have fallen by more than actual production every year since 2022, indicating there just isn’t as much gas as we once thought.
Ask Jones, Watts or Brown and they would confidently reply that the lack of movement in the sector was a result of it having been chilled by the 2018 offshore oil and gas ban. Any moment now, it would warm up and start to produce, they promised, with the same unconvincing insistence of the pet shopkeeper’s assurance that the clearly dead parrot “prefers keeping on its back”.
Jones promised two years ago: “There will be further exploration, delivery, and investment in oil and gas. It lies at the heart of the nation’s fiscal solvency and the nation’s productivity.”
Last year’s Budget initiative of $200m for co-investment in new offshore oil and gas exploration seemed the first admission that this dream wouldn’t be all that easy to attain. When there was too little interest in even that, the Government widened the scope of the fund to allow it to invest in further development of existing fields and even gas storage.
Expressions of interest opened more than four months ago, but we’ve heard nothing from the Government since.
What has happened in the interim is the release of the latest gas reserve data two weeks ago, showing yet another jolting decline in the industry’s estimates of its own gas stores.
In 2023, the industry had estimated there would be 159 petajoules (PJ) of gas available this year and 96 PJ in 2030.
Now, it figures we have 85 PJ this year, falling to 59 PJ at the end of the decade.
It has become impossible for ministers to insist the gas industry is simply stunned, resting or “pining for the fjords” like John Cleese’s parrot. And though the Government’s planned LNG terminal might keep the industry on life support for a while longer, no one is counting on a miraculous recovery.
David Seymour was first out the gates, discussing the “end of gas” in a speech in Queenstown last week.
The Government’s announcement on Monday of a scheme to underwrite loans to help large gas users transition to other energy sources may have been the nail in the coffin.
On its face, the scheme is uncontroversial. The Government is fronting up relatively little risk and could reduce gas demand by 10 PJ a year.
But the decision to intervene in the market to help businesses get off gas, by a famously laissez-faire Government, is a strong signal that there’s no long-term future for gas in New Zealand.
Even Jones conceded the prognosis is terminal, albeit reluctantly and in his trademark, winding manner.
“We’ve received some information from our officials. You heard what I said about 85 petajoules [this year], 2030, one forecast scenario is 50 petajoules. 2036, 25 petajoules. In the absence that those [developers] that we’re already working with are unable to bring other fields where they know there is gas – for example the Karewa field near Raglan, I don’t want to imagine that that’s going to happen with a great deal of ease because, whilst we know there’s gas there, there are infrastructure challenges – your point, ie, ongoing scarcity, is a point that’s important,” he told Newsroom.
“It’s not as if we haven’t done some forecasting. What we think we’re doing is we’re enabling people to transition to other forms of energy…. I acknowledge your point, it’s a downward slope.”
Jones, being the gas booster that he is, will never come out and say it, but the message is clear. When the Deputy Prime Minister is talking about the end of gas, the Government is subsidising the transition for large users and the industry’s biggest supporter in Government is rattling declining reserve figures from the top of his head, the industry’s not resting.
It is, as Cleese says in the Monty Python sketch, “passed on. This parrot is no more. It’s ceased to be. It’s expired and gone to meet its maker. This is a late parrot. It’s a stiff, bereft of life, it rests in peace.”
