Genesis boss warns NZ’s gas production is falling at faster rate than forecast

New Zealand’s gas production is falling at a faster rate than forecasts, while demand has not, Genesis Energy chief executive Malcolm Johns says.

Power generators, system operator Transpower and solar wind power generators have called for more “fast-start” gas peaking plants to be built to ensure energy security in New Zealand’s highly renewable power grid.

“For that to happen new gas supply and greater flexibility will be needed,” Johns said.

This will take time, he said in the company’s quarterly update.

“Although gas is half the emissions of coal, tight gas markets may push electricity generation back to needing some coal to back up intermittent renewable generation, major generation plant outages and growing winter peaks,” Johns said.

Biomass can be an alternate fuel to generate electricity and it is more carbon-efficient than coal.

Genesis, which runs the coal and gas-fired Huntly power station, as well as a raft of hydro assets, is pursuing a domestic supply of biomass.

But Johns said a viable option biomass must also be cost-competitive and convenient to procure.

Fast-start gas peakers are typically used when there is a disruption in the power grid, or when demand is extremely high.

In its quarterly report, Genesis said Huntly demonstrated its value in challenging conditions providing generation flexibility through a period of gas market uncertainty and declining hydro storage during the quarter.

Genesis said construction activities have started on its 63-megawatt Lauriston solar farm, in Canterbury, with first generation remaining on track for the first half of next year.

Johns said energy security remained critical for New Zealand during the energy transition as the country decarbonises.

Genesis said the commissioning of the Kupe KS-9 gas well was ongoing.

NZX-listed NZO has a 4 per cent participating interest in Kupe, along with joint venture partners Beach Energy (50 per cent, operator) and Genesis Energy (46 per cent).

Lifting the previous Labour-led Government’s ban on oil and gas exploration is ranked 19th on the National-led Government’s new 36-point “to do” list.

For explorers, lifting the ban can’t come soon enough.

Point 19 says “take decisions on the removal of the ban on offshore oil and gas exploration”, but the industry is largely in the dark as to how that’s going to happen, and what the new regime is likely to look like.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.