Reports that New Zealand’s natural gas reserves might be dwindling faster than expected may be unwelcome news to households using it to cook and heat.
The Ministry of Business, Innovation and Employment said previous forecasts showed annual gas production falling below 100 petajoules (PJ) by 2029, but revised forecasts indicated that level would be reached by next year.
Paul Fuge, general manager at Consumer NZ’s Powerswitch, said residential gas use was only about 4% of the country’s total gas consumption, so gas supplies for households probably would not run out, but he said they would likely become more expensive over time.
“This is especially true, if we see a death spiral effect,” he said. “As more households disconnect from gas, the cost of maintaining the gas infrastructure is spread across fewer users, pushing prices up further and encouraging even more to leave.
“Lower-income households and renters may be left behind on the gas network, facing rising costs, while wealthier households can afford to transit.”
Consumer’s advice was, when household gas appliances reached the end of their life, it made sense to replace them with an electric alternative.
Fuge said 46% of households used gas of some type and he expected an average increase in gas prices of 10% this year.
“Retailers cite rising wholesale and network costs as the main drivers of price increases. A significant factor is higher gas network charges – the cost of transporting gas to homes – which typically account for about a third of a household’s bill.
Starting in 2024, the Commerce Commission approved an annual average increase of 3.8% in gas pipeline charges over four years, adding about $48 per year for a typical household.
Fuge said Nova and Megatel were the only providers offering gas as a standalone product. Others required people to sign up to a gas-and-electricity package.
“As a result, gas customers may find their choices are limited, and they cannot access lower-cost or more innovative electricity plans and suppliers.”
GasNZ chief executive Jeffrey Clarke said there would be enough gas for household and commercial users for many years.
“To put a 100PJ supply into perspective, about 290,000 homes are connected to natural gas in the North Island and they use just 7.3PJ annually.”
Clarke said there was an estimated 9.5PJ of untapped potential for producing biogas from organic waste in the North Island and 9.1PJ in the South Island.
“With sufficient investment to expedite the development of the renewable gas market in New Zealand, there’s every expectation that all residential natural gas consumption could be replaced by renewable biogas over this timeframe.”
Countries like Denmark have replaced about 40% of natural gas supply with renewable gas produced from organic waste, with plans to make this 100% by 2030, he said.
“In total, it’s estimated up to 23.5PJ of biogas could be produced annually across New Zealand – enough to supply a good amount for commercial needs as well.”
He said LPG was also in plentiful supply.
rnz.co.nz
