New Zealand's government will increase coal-fired electricity output to conserve gas for industry, while it mulls LNG imports and aims to boost upstream activity via a new co-investment fund.
Displacing gas-fired electricity generation in favour of coal is the short-term solution to New Zealand's gas shortage woes, resources minister Shane Jones told Argus on the sidelines of the International Mining and Resources Conference (IMARC) in Sydney, Australia, this week.
New Zealand's only coal-fired generator the 953MW Huntly facility, which can also operate on gas, may be joined by another coal plant the coming years. The country is grappling with an energy shortfall and the lowest gas production this century, while estimated gas reserves fell by more than a quarter in 2024.
"I see our coal consumption in the short to medium term going a lot higher, probably building another coal-fired power station," Jones said.
Huntly's owner utility Genesis Energy recently signed a two-year 240,000t deal for domestic coal supply. Coal imports, mostly sub-bituminous coal used at Huntly, rose by 311pc on the year in 2024, the government reported.
Aside from coal, further generation could come on line at the site of the former 135,000 b/d Marsden Point refinery, where owner of the import terminal Channel Infrastructure may build a diesel-fired power station using significant transmission capacity situated there. A 50-100MW peaker plant could cost less than NZ$200mn ($115mn), Channel said.
A month after dismantling the 2018 ban on oil and gas exploration covering much of the country, the centre-right coalition government is also aiming to finalise the procurement process for an LNG import terminal at Port Taranaki before the next election, due in late 2026.
The government is planning to cut regulations in future to boost renewable power projects, explore deep geothermal resources and secure further gas production.
A NZ$200mn ($115mn) fund to buy stakes of up to 15pc in new gas fields is part of New Zealand's efforts to drive new supply, despite a lack of interest from one of the country's major players.
Negotiations are underway with existing and potential investors, Jones said, pointing to known fields with reserves. The fund will be spread across a series of projects, including possible gas storage facilities.
On liquid fuels, Jones said numerous investors are seeking to build a biorefinery that can be boosted with a distinctive planning, taxation and zoning regime to create incentives.
Creating a strategic fuel reserve in concert with the US government in New Zealand is being considered, based on the strategic fuel reserves held in the western Pacific Ocean territory by Washington, Jones added.
