Natural gas key to low-carbon economy, claims industry leader

New Zealand has plenty of natural gas and will need to use it to keep its transition to a lower-carbon economy, affordable for homes and industry, First Gas chief executive Paul Goodeve says.

The firm wants to continue investing in gas infrastructure. It would be keen on further acquisitions if it could find assets of suitable scale, he said. The coalition’s ban on new offshore exploration won’t “make any difference to emissions” but has reduced the prospects for workers in one of the country’s highest-earning industries, he said.

Fortunately, New Zealand has plenty of onshore gas, he said. OMV, which has agreed to buy Shell’s offshore operations, should also be keen to extend the life of the ageing Maui gas field.

While he’s not worried about nearterm gas supplies, Goodeve is concerned that expectations of the rapid electrification of industry, as part of the country’s climate change targets, may be unrealistic. A lot of emissions reduction can be achieved by switching from coal to gas but the Government’s ban on exploration has already caused some firms to delay making that change, he said.

“While we wait and think about how we can get a perfect solution, we’re missing an opportunity to do a better solution,” Goodeve said in an interview.

First Gas, owned by infrastructure funds managed by Australia’s Colonial First State, was formed in 2016 to acquire the Maui gas transmission system and the non-Auckland gas pipelines previously owned by Vector. In December it agreed to buy Contact Energy’s Ahuroa gas storage facility for $200 million and in July agreed to buy its Rockgas LPG business for $260 million.

Goodeve said the company is an advocate for gas and its place in New Zealand’s energy mix. The growth in LPG demand — 6 per cent-plus in recent years — also shows firms and industry understand its value.

While everyone understands the need to reduce emissions in the economy, Goodeve said doing that on the ground is going to be complex. The country hasn’t even settled on what carbon-zero means and there is a need to move quickly from “headlines” and slogans into detailed modelling and costs.

“Once we do that we’ll see how important gas — LPG, reticulated, LNG, whatever — is to New Zealand,” he said.

“We all want to have a more sustainable New Zealand, but we also want to have one in which people can afford to heat their homes. I’m sure the Government is thinking this through, but it’s complex.”

In the meantime, First Gas will continue with its plans. It hopes to complete the Ahuroa purchase and is preparing to start work this summer relocating the Maui pipeline away from the cliff edge at Gilbert Stream on the Taranaki coast. Its purchase of Rockgas will roughly double the size of the firm and will involve it in LPG purchasing and retailing for the first time.