Overview of New Zealand's gas sector

Gas supply and distribution

There are 20 fields and wells producing gas in New Zealand, all within the Taranaki region.  Pohokura and Maui fields dominate production.

Gas is transmitted by two pipelines to various places in the North Island, and then dispersed across a larger distribution network.  The two main pipelines are owned by Vector Ltd and Maui Development Ltd, while the distribution networks are owned by Vector, Powerco, Nova Gas and GasNet.

Owners of gas pipelines are required to publicly disclose certain prescribed financial and other information under the Gas (Information Disclosure) Regulations 1997.  We administer these regulations.

In recent years, investment incentives have encouraged gas exploration and production.  For example, the government spent $26.4 million on seismic surveys of frontier offshore basins in 2004-10.

Gas demand

Gas demand varies from year to year, depending on hydro-electricity water levels and gas prices.

Of the gas used in 2010:

• 51 percent was used to generate electricity
• 24 percent was used by the industrial sector
• 16 percent was used by the petrochemical sector (to convert gas to methanol and ammonia/urea)
• 4 percent was for residential use
• 4 percent was for commercial use
• 1 percent was used by the agriculture, forestry and fishing sectors.

New Zealand has no connecting pipelines or LNG terminals, which completely isolates our gas market from the rest of the world.

Our gas prices have historically been much lower than other parts of the world, however this margin has narrowed in recent years, due to the:

• downgrade of the Maui reserves
• negotiation of long-term contracts at Pohokura and Kupe
• expiry of the Maui legacy contract in June 2009.

Regulation of New Zealand's gas market

We co-regulate New Zealand's gas market in association with the Gas Industry Company, as specified in the Gas Act 1992.

History of New Zealand's gas sector

The Maui gas field was discovered off the coast of Taranaki in 1969.

Its reserves were very large, even by world standards.  This gas was bought to market 10 years later, and spurred development of other large energy projects, including an ammonia-urea plant, the Motonui synthetic petrol plant, the Waitara Methanol Plant and several gas- fired electricity generation plants.  The Maui supply was to dominate the New Zealand market until 2007, when the Pohokura field reached full-scale production.  A major reserve downgrade of Maui in 2002-3 contributed to a number of rapid changes within our gas industry.

• The government made significant moves to attract further investment in New Zealand gas exploration and production.

• New gas finds were made in and around Taranaki to add diversity to New Zealand’s gas supply.

• New gas finds diluted the producer concentration of the past.

• New Zealand’s first gas storage facility was commissioned in 2011 at the depleted Ahuroa field.

• A co-regulatory governance model was developed for the gas industry.  Policy initiatives are now developed by the industry body - the Gas Industry Company, and then submitted for approval to the Minister of Energy and Resources.

• Open access to the Maui pipeline was made available.

• Governance rules and regulations of the gas sector were promoted to boost competition within the market.

Related information

• Energy Data and Modelling

Gas (Information Disclosure) Regulations 1997