Kiwi households are likely to have to pay more for their gas. Photo / 123rf
Kiwi households are likely to have to pay more for their gas. Photo / 123rf
By Susan Edmunds, RNZ
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,” Fuge 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.
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.
New Zealand's gas supplies may be dwindling fast than expected.
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 such as 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.”
