Source: The Post – Tom Pullar-Strecker
Some New Zealand businesses may be getting very concerned about a shortage of natural gas, a business survey suggests.
BusinessNZ and energy management company Optima sought the views of about 400 businesses and received responses from 66.
Of those, 31 reported they had either put up their prices, reduced operations or cut staff due to the rising cost or unreliable supply of gas.
The bulk of the responses came from businesses that were involved in manufacturing or food processing, but the survey appeared to show the degree of concern was quite mixed.
Asked to rate how concerned they were about future gas availability and prices on a scale of “one to 10”, the average response given was just under four.
An explanation may be that 28 of the respondents didn’t believe it would be commercially viable for them to switch to an alternative fuel for any of their production, while the remainder indicated that might at least be a possibility.
Tina Schirr, executive director of BusinessNZ’s Energy Council, said gas prices had on average more than doubled over the past five years.
While some businesses could transition to alternatives, there was not an easy fix, she said.
“If we do nothing, a major de-industrialisation crisis could escalate in the next two years, having serious and devastating consequences for suppliers and customers of gas-using businesses,” she said.
Schirr said increased investment in developing gas fields was desperately needed “in the short term”, but the Energy Council and Optima also called for “a joint industry and government plan for a managed reduction and transition away from industrial gas supply”.
The survey showed a huge range in the prices respondents were paying for gas, with some charged less than $15 a gigajoule (GJ) and others reporting paying more than $25/GJ.
Consumers pay much higher prices, while Methanex — the country’s largest gas user — is believed to be paying no more than $6/GJ under a contract that is due to expire in 2029.
Fertiliser company Ballance, which is the second-largest chemical user of gas after Methanex and is also believed to have benefited historically from cheap prices, has warned it may need to close its Kapuni urea plant in South Taranaki which employs 120 staff, if it is unable to secure an “affordable supply”.
Resources Minister Shane Jones has responded to the concerns by suggesting some natural gas supplies could be ring-fenced for industrial users, leaving power companies — which burn gas to produce electricity — to rely more on other sources of energy.
Work on finding a way to import liquefied natural gas remain on the drawing board amid concerns over its cost.
The Government has passed a law that will lift the ban on new offshore oil and gas permits but doubts remain over whether the hunt for new supplies will resume, or when any new discoveries that eventuated might come on stream.