John Kidd: Enerlytica director on New Zealand's increased decline in gas energy supply

The decline in gas supply has led to production cuts and a 99 percent increase in coal-generated electricity, according to MBIE.

Methanex, New Zealand's biggest energy consumer, has cut back on its methanol production as a result.

Director of Enerlytica, John Kidd, says the system will adjust - but unfortunately this is not a costless exercise.

"Structurally, we're short on energy - full stop. So it's often lost on people that we don't have enough energy in the country to be able to support our demands. So we do rely on international markets anyway."

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Episode Transcript

Speaker 1 (00:00):
Heather Due to CELA, New.

Speaker 2 (00:02):
Zealand's energy troubles are getting worse. Gas supply dropped twelve
percent in the March quarter. That's twelve percent down compared
to the same time last year. This is the lowest
quarterly net production since nineteen eighty five. Now gas was
down because of the decrease in overall production, but also
a planned outage in the poor Hookura gas field, and
this has led to a staggering ninety nine percent rise
in coal being burnt for electricity. Also, greenhouse gas emissions

(00:25):
are up twenty one point five percent. John Kidd is
the director and head of research at Analytica and with
US Now, hey John, heaven hell are we in trouble.

Speaker 1 (00:36):
We're in the street system. We have a structurally reshort
of entergy full stop. So it's often lost on people
that we don't have enough energy in the country to
be able to support our demand, so we do lie
on international markets. Anyway, Think about the CARDI your drive.
There's nothing in the fuel tenth of that car. Those
of US drive petrol engines, which is made domestically, so

(00:58):
we import energy and was short as we are increasingly short.
More broadly, then we need to import more energy to
keep ourselves fed from day to day. So your question
is how are we in trouble. Well, you know, we're
becoming shorter of indigenous energy and therefore we're having to
rely on international energy more.

Speaker 2 (01:15):
And the international energy, obviously is coal that we're pumping
into Hunt.

Speaker 1 (01:18):
They rhyme, that's right, yeah, And that's a function of
a few things as well. So you've got you do
have lower gas coming into the system, and gas is
a preferable fuel of coal. Of course, cold is the
fuel of last result if you like, for the elytricity sector.
But you've got other factors in there as well. We
had two very wet years last year and the year before,
and that's often lost on people too. So we had
a lot of hydro on the system. We had a

(01:39):
lot of higher ranking fuel in the system, and we
don't have it this year. We're well blown average for
this time of the year the hydra and the last
two years also we had very soft arm and we're
now starting to see real demand growth coming through and electricity.
So if you put all that together, we need more
of this stuff to come out of the wires. At
the end of the day and if we don't have

(02:00):
we has to come into the system. We don't have hydro,
then we need to look to something else. And unfortunately
that's so John.

Speaker 2 (02:05):
If we're down on the Hydra lakes at the moment
and we're dropping in the gas, does that mean and
there's only so much that Huntley can burn, does that
mean that we're going to have power outages this winter.

Speaker 1 (02:16):
That's been a risk for a while. We've been concerned
about that for some time. You know, there's it does
boil down to the peak. So when we are in
the coldest period of winter so jeary is this time
of night and into the evening, and we don't have
much wind coming through the system. Obviously soul is not
a factor. Then we need to call on what is
available to us. And we've already been told by the

(02:37):
system operator Transperer And it's a general concern across the
sector that this winter, during those periods of what we
call dunkle flout, which is you know, the doldrums where
we don't have that winter and there is no sun
and we're constrained with other aflds coming into the system,
then there is the risk that we might not have
much juice to be able to meet thought about Okay.

Speaker 2 (02:54):
How far how long before we call this a crisis.

Speaker 1 (02:58):
Crisis just isn't a word that real enters the sector's
head to frank you know, it's a matter of just
making things work. There will be many things that can
be done on the way to help manage the situation.
And you know we're seeing this in the gas sector
as well. What's often lost in all the noise of
this is that we're seeing some pretty dramatic side responses here.
So methodex is our biggest energy user normally by far,

(03:20):
they're well down on that consumption now and it's the
worst kind of an outside response. You're a massive export,
a billion or exporter out of Taranaki who can't run
at full capacities because they don't have the fuel available
to them. So you know what I'm trying to say
is the system will adjust. Unfortunately, it's not a costless exercise,
and demand will generally come off to help meat supply

(03:41):
as well as supply meeting demand.

Speaker 2 (03:43):
Well, here's hope and John, thank you so much, really appreciated.
John kid director and head of research at Analyticate. Just
to remind you why demand will come off is because
we're asking some of our big prou our big manufacturers
to stop their work when we need them to. That
should not be happening in a first world country.

Speaker 1 (04:00):
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