Parliament will pass a law to permit the construction of a commercial liquefied natural gas (LNG) terminal that will provide a flexible fuel supply for shortages in dry years.
It is part of a raft of reforms responding to high wholesale electricity prices which have forced some businesses to shutter their operations. A shortage of natural gas and low water levels in hydro dams have driven the spike in power prices.
Imported LNG was estimated by officials to cost between $17 and $24 per gigajoule. Gas traded at an average price of $55.27 last Wednesday, an all-time high.
These imports would support flexible generation of electricity but would be unlikely to replace the need for a domestic gas supply, a government fact sheet said.
Energy Minister Simeon Brown said the import capacity must be ready by winter 2026, and the gas sector industry body was helping coordinate its construction.
This will be a complicated agreement involving multiple parties. Likely, a gas company will assume the commercial risk of building the import terminal, supported by long-term supply agreements with electricity generators.
Interest.co.nz understands discussions are advancing, but no decisions have been made about the terminal's location or the exact nature of the deal.
Once ready for construction, the terminal is expected to receive direct consent from Parliament, bypassing the usual local government consent process. This power was last used for building Wellington’s war memorial in the 1930s.
Brown said no subsidies would be provided to help fund the terminal, but the Government would explore ways to insure the terminal against future gas bans.
He attributed the limited supply of domestic gas to the Labour Party’s 2018 ban on new exploration, though much of the immediate shortage stems from existing fields producing less gas than anticipated.
The National-led Government promised to reverse the ban on offshore oil and gas exploration before the end of the year, but it would take years for any new supply to come online.
Brown also announced several actions aimed at bolstering energy security.
Restrictions on electricity lines companies owning generation will be relaxed later this year, potentially enabling more investment in new electricity plants.
Regulatory restrictions on the amount of lake water hydro dams can use to generate electricity will be reviewed. Any necessary changes are to be made before next winter.
Finally, the Government will review the electricity market's performance to ensure it delivers reliable electricity at the lowest cost while remaining efficiency and competition. Details of this review will be finalised in the coming weeks.
Brown also said he was seeking advice on how to fill upcoming vacancies at the Electricity Authority to ensure the regulator has the “appropriate mix of skills” to address current circumstances.
122 Comments
the Tekapo - Pukaki twins - would require a pump at both ends of the canal lining the two and the canal has apparently be laid so flat the water can flow backwards. We'd have to accept greater ranges in lake levels of these two lakes though.
But even more cost effective is build more wind, a lot more wind so that when there is a surplus, we run the hydro lakes at their minimum flow levels, allowing the water to build up in each lake so that in the 1 or 2 week periods when there is less wind, we can run the hydros flat out to cover the power required.
kiwi_overseas,
have some form of cost effective pumped hydro. Easy to say, but but perhaps you could let us have some technical and financial analysis such as where you would build it, how long it might take and a cost estimate. Otherwise, it's just hot air and possibly ABSURD
The following is a site for the UKs first pumped hydro station.
https://www.fhc.co.uk/en/power-stations/dinorwig-power-station/
Will be interesting to see if anyone wants to invest in imported gas.
which company are these guys doing this for, there is already a LPG terminal that serves the storage facility at wiri.
POAL - Manukau Bar to LPG Terminal
where are they going to build the extra facility
I am not sure of the difference between LNG and Lpg. But I do know most gas appliances can run on either, the only difference required is the size of the burner jet. It seems LNG requires converting back to gas to be used, LPG does this in the bottle. Who knows if they even considered LPG, I take it it is more expensive, but it is supposed to be just an emergency supply anyway.
LNG is a much bigger deal than LPG, LNG tankers are huge, and could not enter Manukau harbour.
The LPG is stored at ambient temperature and up to 40 bar pressure, and LNG is liquified at minus 160 Celsius at atmospheric pressure.
LNG at ambient temperature is not possible at any pressure
LPG would seem to make more sense. It can be stored long term, with no energy loss. The infrastructure is already there , to some extent. Even if importing more allowed the gas used to produce it here to be used for power generation for 2 - 3 months in a dry month.
Continuing a political trend I've noticed over the last 10 years, if the Herald runs a story theme for 2 weeks straight, there will be a new law passed.
The absurd bit is that this 'dry year crisis' has been months in the making, and it doesn't seem like the politicians noticed till the herald got onto it.
and it doesn't seem like the politicians noticed till the herald got onto it.
The politicians / bureaucrats worked with the Herald to run these stories to warm up the population to the project. It's a comprehensive public affairs campaign.
If you pay attention you see it everywhere. Want to sell the public on a multi-million dollar 3rd Harbour road crossing, get NZTA to close a coupe of lanes due to high winds or whatever in the lead up to the announcement and then pitch the project as resilience.
LNG - go for it. In some ways I wish Port Taranki would get it but my other side says ratepayers will foot the bill. Disclosure I live in New Plymouth. Would be happy if the port was privatised before any port enlargements to take LNG tankers or enlargements for wind farm components.
Not sure if a turbine/generator is going to be shutdown at Stratford. According to wikipedia "The current power station comprises a 377 MW combined cycle that opened in 1998 and two open cycle gas turbine units for peaking power that opened in 2011. The station is now owned and operated by Contact Energy
There was heaps of cars that were converted to CNG in the 80s and 90s, they didn't need a new 'special engine'
By 1985, 100,000 CNG conversion kits had been fitted out of a fleet of 1.5m vehicles, and 50,000 vehicles were running on LPG by 1987.
Yep. i agree.
Years ago Genesis had a proposal to built a gas fired plant in Rodney. Kind of near Helensville.
Near a transmission line. TICK.
Oh, the gas pipes through Auckland are not sized big enough and the whole lot of it would need to be replaced. CROSS.
One of the generators many ballsups.
So this implies to me that Mardsen Pt would not be as good as New Plymouth as an infeed point.
New Plymouth is too small for FSRU LNG ships, there is insufficient room for maneuver, and too great a risk for neighboring housing areas. Someone should consult a marine expert to explain the difficulties, particularly if LNG tankers are envisaged to load into the FSRU which is the normal mode of operation.
Don't worry about that. For a few million TRC will spend ratepayers money to enlarge the port. They were looking at $80mill to sort it out for huge wind turbine components, mainly blades i think for a huge off-shore wind farm in the Taranaki bight. I'll be joining whale and dolphin watchers if i get more of a whiff if that's going to happen.
I think they need to look at how much value methanex is adding to the gas they use, and export. Less the $ 60 million carbon credit subsidy. Perhaps making the current shutdown agreement into a permanent seasonal arrangement, might be more cost effective. Likewise for the urea fertiliser plant.
So why are we using our precious domestic gas to make methanol to export, only for us to run out of gas and have to switch to expensive imported gas? If we just stop exporting methanol, the remaining gas will last longer and give us time for a better dry year solution.
Not so simple. The network still requires s lot of maintenance. It is highly likely that when methanex leave it will not be viable to maintain the existing pipelines, compressors, and other systems.
I imagine if there is any gas left, it would be restricted to the Stratfod power station, and maybe a few other taranaki based industries.
This assumes that there are floating regassification plants just sitting around waiting to be leased.
LNG is very dangerous stuff. It has to be -160 degC or so to be liquid at atmospheric pressure.
Many years ago in Japan a fire broke out at an LNG facility and several people were killed - in the car accidents of people trying to flee the area.
Sounds like a typical night of boy racing....
Or people could lose there jobs because of dry year power prices, at least NAct doing something, in fact thats enough IMHO for some people to vote for them again, doing whats needed so common NZers can have affordable power in dry years.
One thing this country has by the TCF is Gas but we haven't made the investment case like many non western countries around the world do and bend over backwards roll the red carpet out for the billions needed to explore and develop a Major Gas field previously Looney lefties did a fine job to scare any idea of this kind of investment the red tape and years of consenting enviro rules regs and likely HUGE Carbon TAX bill to fund NET ZERO agenda just when the cashflows start many Major O&G aren't interested in taking the risk these days and rather M&A just buy back their shares and pay dividends....
But in time I'm sure we will see many of our large targets drilled ...$150bbl oil $20-$50Gj Nat gas ..
Barque prospect, about 60km offshore from Oamaru, could be an economic "game changer" for the region - a study estimates royalties and taxes over the life of the field could be $32 billion.
"The study shows a commercial market for gas could result in industries like methanol, dairy and fertiliser plants establishing themselves around the Canterbury and Otago regions," he said.
NZOG have the permit, but have for more than two years been seeking a joint-venture partner, and must drill or drop the permit by April 2022; having just this week gained a three-year permit extension.
Mr Madgwick said construction could create 5700 jobs annually and add $7.1 billion to New Zealand's gross domestic product (GDP).
Alternatively, an option to bring the gas-to-shore could generate $450 million in annual GDP and $700 million a year in royalties and taxes.
"Taranaki's benefitted enormously from having a successful and sustainable energy industry over the last 50 years, and this study shows the same exciting potential for Canterbury and Otago," he said.
https://www.energyresources.org.nz/news/another-blow-to-new-zealands-en…
It could also have helped lower emissions here in New Zealand and around the world by replacing coal for industrial use and electricity generation.
The offshore area available for exploration has now shrunk by over 80% since April 2018.
“This raises serious questions for New Zealand’s long-term energy security, given the absence of realistic alternatives to natural gas to power industries, heat our homes and keep electricity prices down.
Wow, the level of understanding about LNG in the comments is low. Not the same as LPG. And yes energy is expended to liquify it. Worth noting that the drop off in gas exploration began years before Labour’s ban, what does that tell you? Todd has a licence for a field called Karewa but hasn’t chosen to develop it.
Yes because we are a tiny nation at the bottom of the world ... why would a Exxon , BP etc want to develop muti Billion CAPEX Gas field in "PURE NZ".. tens of thousands kms away from the hungry LNG markets ...tiny domestic demand hard to make back on CAPEX would take many years ...then along comes the GREENS BAN BAN !!!!! TAX
Building windmills that work on average 20% of the time isn't a fix ...with the balsa Blades coming directly from the Amazon mass deforestation ... also the blades break down and drop chemicals into the surrounding countryside alongside killed birds by the thousands ....plus massive eyesore ....
2MW Wind Turbines use ~ 560lb of Neodymium (and 65lbs Dysprosium). Processing 560lbs of Neodymium creates 1,120,000 lbs of toxic (560lbs radioactive Thorium & Uranium) mine tailings, 4,480 gallons of radioactive waste water (containing more Thorium & Uranium), 19,600 gallons acidic waste water, & 9,600 Cubic Meters of toxic gases (Florine, Hydrofluoric acid, Sulfur Dioxide, Sulfuric Acid)
A 2MW wind turbine in NZ will typically have a capacity factor of around 40%. That means over a 20 year lifespan it will produce around 140 GWh of electricity. The turbine may last longer and any extra generation is basically free.
To make that much electricity using natural gas would take 1PJ of gas, optimistically assuming the plant runs at 50% efficiency.
There is no comparison, the wind turbine is far more efficient. But the gas plant can run whenever, that's all it has going for it.
The valuable minerals like neodymium and copper in the turbine will be recycled. No way to recycle natural gas.
https://cowboystatedaily.com/2024/08/21/why-old-wind-turbine-blades-are…
"Until a few years ago, it was common for old wind turbine blades to be discarded in local landfills. That’s not happening much anymore as landfills require them to be ground up “into really tiny pieces,” which is expensive."
Huntly, Methanex, Kinleith NZ steel and other industrials must be freaking out.
How much is an LNG terminal? Is it really 1 billion dollars? Why would a company invest in that kind of capex without guaranteed demand for their expensive product for years into the future? Seems a bit incongruous with domestic exploration. We need domestic gas supply!
If the investor in an LNG terminal recovers his cost of investment, the regasification, the leasing of FSRU, ETS import costs: the total cost of gas will be in excess of the $17 to $24/GJ estimate above, perhaps by another $10 GJ
This will no feel like a solution to all the current industries using natural gas which used to enjoy gas at around $7GJ or less.
No will it be a solution to the cost of electricity. At $30/GJ the power price would need to be more than $300/MWhr, that won't feel like a solution either, energy intensive industries will be shutting down like they are in this period
Thanks for those sobering numbers. I heard someone mention on RCR that NZ uses something like 300 pJ per year of gas. If my math is correct there's 1 million GJ in 1 PJ, and if the cost of gas goes from$7/GJ -> $30/GJ then that'll cost the country 6.9 billion dollars per year. I guess if GDP shrinks because of the increased energy costs, then... that would be bad.
If we got our act together we could add 1GW/2GWh of grid scale batteries and 2+ GW of wind/solar/geothermal in the same time frame. With coal+Huntly as backup we would be largely sorted.
I don't know who's going to be carrying the can for this gas import facility, as unlike the above I can't see it making money.
Yes, the only way it can work is the consumer pays more. Plus profit to whatever donor benefits from it.
All the government has done is guarantee their donors a resource consent, it doesn't change the economics.
When solar drops to a few cents a kwh, we will look like right Charlie's.
The entire LNG process involves significant leakage of methane. Over the entire life cycle, LNG emits more carbon eqilvalents than diesel. Diesel has other non greenhouse emissions though.
Are farmers going to have to compensate for extra methane emissions if we use LNG? Increasing our methane emissions would not be a good look.
Based on the research I've read, natural gas often has higher emissions than coal when leakage is taken into account.
This study suggests around a ~5% leakage rate makes emissions on par with coal, or when the cooling SO2 of coal is taken into account, just a 0.2% leakage rate brings the warming potential on par.
https://iopscience.iop.org/article/10.1088/1748-9326/ace3db
We don't have any good data on leakage rates in NZ, but LNG is always going to be more emissions intensive than local gas as liquefying it takes significant energy, typically generated by burning gas at the source terminal, plus there are more opportunities for leaks.
So rather than loading up on solar, wind, and other renewables which would locate our energy production onshore, the government wants to spend billions on a system that emits greenhouse cases and leaves us at the mercy of international pricing and supply chains?
Genius!
/sarc
These idiots talk about energy security then come up with a plan to have huge reliance on others to provide our energy. WTF are they talking about?
The NZ battery project reports (they shut down) and Genesis' successful trail of using torrefied pellets in place of coal/gas in Huntly generators, showed the way forward. We would essentially be able to use the huge pine forests in the central NI and elsewhere to create pretty much zero GHG emission coal, thereby getting to almost zero emissions and ensuring energy security. If only we had a government not pandering to special interest groups...
If anyone can find the flaw in my suggestion please fire away, and granted these numbers are plucked from nowhere.....
Lets say the LNG Terminal costs $1B.
I can buy 400W solar panels for $67 USD each.
Lets assume NZ$150 per panel installed on rooftops near locations of high daytime peak consumption.
Why not spend $1B on 6 million 400W panels.
Also assume 100W average output over a day (wild guess - forgive me)
That's 600MW of generation that doesn't have to be drawn from the hydro lakes which can then be use more as night time / winter batteries and reduce reliance on LNG.
Lots of homes already have those things. Although if we were to lower the insulation standard required for new builds, we can then set a goal of upgrading everything later. It always looks good when you hit a goal. That sort of thinking would probably appeal to the current government.
The problem with solar is it doesn't solve the dry year problem. You can't stockpile the sun rays, and you don't get more solar generation in a dry year (at least not in auckland...).
That water you save with your solar, the generators aren't going to waste it, it will be used to make power, and the market will come into a new equilibrium post your solar project. Then a dry year will come along and we'll have a shortage again.
I can only think that you'd keep the hydro in reserve for a dry year, and just spill the water for the 7 in 8 non-dry years, and then crank up the hydro for that 1 in 8 dry year. But I don't think we even have enough hydro storage to cover a dry year, sure going into it at 100% storage will help, but if there are no inflows we'd still run out, 100% of current storage isn't enought to make it through a season.
There is no water being spilled at night right now[*]. Lets say you got solar panels a couple year ago. Can you explain how these solar panels will generate additional electricity this year, to make up for the lack of hydro generation?
We need storage from wet years to dry years. Hydro storage between day and night we already have, it doesn't help with dry years.
[*] spilling water is very rare in general, not just in a dry year. If there is more water than usual, like last year, then high cost thermal will cut back on generation.
I'm not talking about reducing spilling, just replacing daytime hydro with solar to allow more to be used at night. See current 2.4GW generation from hydro: https://www.transpower.co.nz/system-operator/live-system-and-market-dat…
But our generation shortage isn't at night time only. How does using more hydro at night prevent us needing extra natural gas to make up for a lack of hydro?
Your just moving hydro generation around during the day, but there isn't enough hydro at the moment, changing the time it's consumed wont give us more generation this year. If i only have enough water in the dam for 10MWh of generation, it doesn't matter if i generate that mostly during the morning evening and peak, or save it up for night time, i still only have 10MWh. It doesn't turn it into the 100MWh that i'd have if it wasn't a dry year.
The idea is that solar replaces daytime baseload , so other forms of production can scale back during the day . the remaining gas switches from baseload to peaker plants . hydro can vary as much as the dams and consents allow. Which is not much in the north island.
yes that's how solar can fit into our daily generation profile in a normal year. But in a dry year, when there isn't enough hydro, how does this create extra generation? It's just moving around the time of day dispatchable generation dispatches.
For that extra dry year generation your going to have to leave your gas peaker plants running all day for baseload, and save the lmiited hydro for the peaks. So... we still need the LNG import terminal.
tell us what happens when the LNG runs out or we can't afford it down here because the rich nations are buying it all?
Maybe we could anticipate this obvious next issue and deal wit the issue now.
Sorta like how NZ does harbour crossings and ferries is what is being proposed i.e can kicking.
but solar doesn't just 'take up the slack' in a dry year. It also takes up the slack in a wet year. The market will move to equalibrium, cheap wet year prices will encourage more demand (less double glazing retrofits, more coal boiler switching), and/or less alternative generation will be built as the returns aren't there. Then we still are left with the dry year problem.
When hydro makes up a sizable chunk of generation, you need generation that can take up the slack just in a dry year, say LNG imports, or domestic gas storage, or stockpiled biomass. or huge hydro lakes.
But as you can see there is some hydro still being utilized during the day even in a dry year, far below capacity but still being used. I'm suggesting solar will replace some of this use saving it for night time.
I haven't done any calculations to quantify how much can be saved but am I wrong in saying it would save?
It doesn't solve any of the problem.
For the same reason when geothermal overbuild is proposed as a solution, the new plant is to be kept mothballed until there's a dry year. It wont be producing in normal years.
I suppose you could ask homeowners with solar to keep their inverters switched off except in a dry year, but that's going to ruin the economics of solar to the homeowner.
That's not what the report about this said. It said you build a plant with 4 wells, then use only one of them during normal hours, switching the well to ensure they are all working all the time. Dry year, you use all 4 wells. Do this with 3 or 4 and you have overbuild, yes, and those producers would need to probably be paid double for the power they make all the time to make it viable.
We currently have 3 or 4 generator units at Huntly mothballed most of the time until we need them, then we spin them up. The torrefied pellet replacement fuel for these is the better answer, as it has been trailed and found to work (https://www.genesisenergy.co.nz/about/news/genesis-biomass-trial-succes…). We just need to make them ourselves, which means making the plants (at least someone is doing it: https://www.scoop.co.nz/stories/BU2404/S00155/foresta-secures-10-year-w…). Its pretty simple, we have heaps of pine forests and slash all over the place. That's our sustainable fuel supply.
Debateable for our context and only looks at one side of the picture for a snappy headline (energy units produced vs CO2). Most of our wood appears to get put into packaging, which will decompose fairly quickly and release carbon. So in our context we would divert some of that wood to making power ourselves. Yes emissions would still happen, but its still a lot more sustainable than digging already stored emissions out of the ground and putting them in the atmosphere as the emissions are already taken from the atmosphere and recycled.
Dry years are currently a problem because hydro is such a large% of our renewable power. As solar becomes more common, the effect of a dry year lessens. But remember, the goal is to reduce all fossil fuel use. So overbuilding solar for current use just means it can be used to replace other fossil fuel heating, with the fossil fuel been kept as a back up for those heating requirements. What I am saying is I don't think our current solar installation capability is anywhere near causing oversupply.
yeah i'm not so convinced, not with the current market structure at least.
Let say we build out another 9TW of generation capacity, wind, geothermal, solar, to double our generation. Now hydro is 30% instead of 60% of installed capacity. You have a dry year, it now knocks out 15% of generation instead of 30%, sounds better, but...
We always pay the cost of the marginal generator. The absolute shortage is still 2.5TW, you still need the same amount of coal or gas to meet that missing generation, and I think that will have the same effect on the wholesale price.
Demand response could be another part of the solution. Like the new contract with Tiwai, you can stockpile aluminium in the wet years to sell during the dry years. Suppose we did this massive overbuild, and used some of it to product more aluminium, or hydrogen for those niche needs that cant be electrified, or that fertiliser the Norwegians produce from electricity. Some product that can be stockpiled, and production cut back in a dry year. Like... sawn timber perhaps, dried milk powder?
It wouldn't be it's primary purpose, but generally there's a couple of weeks warning of possible high rainfall events, capable of flooding the lake. I think the problem occurs when the waikato and tributaries below are full, as Taupo doesn't actually have a hydro on the lake outlet itself. Presumably the actual spilling occurred in the dams downstream.
A dry year leaves us short something like 2-3GWh looking at the MBIE data. That's pretty close to our total hydro storage.
https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resourc…
Using them primarily as storage presumably means they are significantly less efficient at generation. They'd need to be kept high so they would generate less and spill more. We'd be spending huge money on overbuilding capacity so that our most precious assets can be underused.
It's a possible solution but not an elegant one, and the effects on the rivers would need to be considered too.
Even now in a dry year / power crisis it still shows we're generating 2500MW from hydro. I realise not all this could be stored but surely we could run a higher average lake level with all that extra solar?
My solar at home is generating at 10% of it's max at noon in winter on a cloudy Wellington day, not full utilisation but assuming the same efficiency across $1B worth of panels that's a big reduction in power draw from other sources.
Here’s some great corporate welfare, supported by Ministers who seem to revel in making stupid decisions.
Let’s just ignore the fact that the private sector already decided there was no more viable gas in NZ and left. Nothing to do with ‘Cindy’.
Let’s just ignore the huge impact on our balance of payments (is that even still a consideration these days?).
Let’s ignore any climate change action.
Let’s ignore the real issue that we have no immigration plan, no industrial development plan, and insufficient hydro storage and unreliable snow melt.
Let’s not even bother adopting the Australian approach of funding residential solar.
Welcome to the new South Pacific Albania.
Albania is a beautiful place. I highly recommend visiting it 10 years ago. Getting overdeveloped now.
https://www.travelandtourworld.com/news/article/abandoned-beaches-and-e…
Solar is getting better and better by the year, would seriously look at it if only the house had been pre wired for it when it was built. I have the ideal North facing roof at a decent pitch, it is perfect but it would be rip shit and bust on a 2 storey house like mine to get it in. The existing switchboard its totally inaccessible for starters for any hidden wiring. I guess some clever hollow Cornice or moulding in the garage could be used to conceal it. Will probably be forced to look at it one day.
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