Andrew Jefferies: Echelon Resources CEO on the falling rate of natural gas production

A continuing squeeze on natural-gas supply, with little hope for a quick solution. 

Production fell 20% in the first quarter, compared on the year before, to 22.85 petajoules.  

Industry spokespeople say available gas is depleting and exploration of new fields is banned.  

Echelon Resources CEO Andrew Jefferies told Mike Hosking we're not going to get more gas without looking for it. 

He says gas provides nearly the same amount of energy electricity does, so people can't do without it. 

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Episode Transcript

Speaker 1 (00:00):
More trouble and energy. For the first quarter of this year,
gas production was down twenty percent. Now the trouble is
the demand isn't now the word they're now using apparently
as crisis commercial users are facing unsustainable price hikes or
not being able to renew their contracts. According to Shane Jones,
is all the previous governments.

Speaker 2 (00:16):
Since twenty eighteen and nineteen. When the curtain came down
on the industry, people stopped drilling, people lost confidence that
there would be no future this fossil fuel in New Zealand.

Speaker 1 (00:27):
Echelon Resources formerly in New Zealand Oil and Gas CEO
Andrew Jefferies is, well, that's very good morning to you.

Speaker 3 (00:32):
Good morning Mike.

Speaker 1 (00:33):
So Jones was blaming the previous government. Is Jones right?

Speaker 3 (00:38):
I think I do believe that Shane Jones is correct. Okay,
So yeah, the previous government was influenced very much by
the Greens with the de industrialization agenda. And look, I
think that ideologic call thinking got as to where we

(00:59):
are at the moment.

Speaker 1 (01:00):
Is it the looking or the finding even if we
were looking, could we find or is that a problem
potentially as well?

Speaker 3 (01:07):
I think you've got a look to find Mike. So
if you aren't looking, then you're not going to do
any finding.

Speaker 1 (01:15):
If we start looking, can we solve this problem? Are
you bullish on that or we just don't know.

Speaker 3 (01:21):
Look, we can't solve this year's problem by looking because
it's a long term industry. So I think we've got
a couple of a couple of different aspects. You've got
a short term aspect, and I think in the short
term we're going to see the government having to buy
or somebody having to buy out long term users contracts.

(01:43):
That's going to reduce exports. That's not going to be
great for the country, and it's going to put jobs
at risk.

Speaker 1 (01:48):
Who we buying these contracts from.

Speaker 3 (01:51):
Look, you'll have to buy them from the folks who
use the gas and have long term industrial contracts, and
so from the power producers who use gas as well.
So we're going to have to supplement that demand with
coal in the power industry, and you're just going to

(02:11):
have to probably have to reduce exports. And as I say,
that always puts pressure on those companies to see whether
they think it's a reliable place to produce goods in
New Zealand.

Speaker 1 (02:23):
So we can I get that. So you're painting me
a big picture there and you're depressing me at the
same time. Can we for this winter, get this all
this coal importation that we're doing at the moment and
the stockpiles and stuff. Can we get through the winter
with an alternative light coal or hope it rains or whatever.

Speaker 3 (02:41):
I think it's. Look, I think it's the stockpile and
hope strategy. So and I think that, well, that's the
thing to get us through this winter. Looking longer term,
is where we can where we have a few more
levers to pull and on the supply side, we can

(03:03):
encourage companies to do that looking that we were talking about,
and they're going to need support, and they're going to
need support from both sides of government to do that,
because our industry can't operate in a place where you
don't know what the next government's going to do. So
I think there needs to be a bipartisan coming together.

Speaker 1 (03:27):
I just wonder if you're going to get that. Having
said that, well, I mean you've got the Greens.

Speaker 3 (03:34):
Correct, correct, and I think, you know, I think the
Labor Party really has to have a bit of a
think about to what extent there their link up, how
important their link up to the Greens is in terms
of the country's ability to be a competitive exporter and
to take its place in the global in the global markets.

Speaker 1 (03:57):
You sound depressed, and you've you've depressed me. I mean,
there's a country on its knees already, Andrew, and you're
just telling we cannot get out of our own way.

Speaker 3 (04:09):
I think we can in the longer term, Mike, And
luckily folks in the past have had the foresight to
have a large coal fired power station, which we still
have and we haven't shut that down. So look, we
have that gas is a fantastic has a fantastic ability

(04:30):
to provide energy where it's needed. And I think people
don't realize in New Zealand we have gas provides about
the same amount of energy as electricity does, so you
can't do without the gas. If you wanted to do
without the gas, you've got to double the size of
the electrical system for a start. So we've got a

(04:51):
real opportunity here, and we have gas here, so we
can supply gas locally with support and we'll probably have
to encourage explorers to come in and have a go.
You can also import natural gas.

Speaker 1 (05:06):
Well, we were going to do that when we ran
out of power last one to what happened to that?

Speaker 3 (05:10):
Yeah, Look, I think those things, those things take a while.
You can't just magic anything into existence. But and so
so I'm not sure why it hasn't progressed further than
it has mine. But the reality is it's pretty expensive.
Somebody's got to pay, and I think it takes a

(05:32):
while to get to a point where, you know, things
get bad enough that there's a willing somebody willing to pay.

Speaker 1 (05:41):
All right, I will follow it up with Simming and Brown.
He was the man who made the promise. Andrew, listen,
I appreciate your inside very much. Andrew Jefferies, who'se Exchelon Resources.
They will want some oil and gas. Do look up
the MS trade point story that's been floating around the
last twenty four hours. This was transpowered. They were going
to sell it, and if they weren't going to sell
it because they couldn't sell it, they were going to
close it down until yesterday they suddenly decided we might

(06:03):
need a.

Speaker 3 (06:03):
Bit of it.

Speaker 1 (06:04):
So all in all, it's just yet another insight into
how bugged we are.

Speaker 3 (06:11):
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