Methanex helps keep lights on but underlying problems remain

Energy Resources Aotearoa Chief Executive John Carnegie says today’s announcement that Methanex has closed its operation until the end of October is great news for the country’s short-term electricity needs but masks an energy system in crisis.

Carnegie says that since 2021 Methanex has effectively acted to balance the gas market, progressively reducing its demand to allow the gas it would otherwise turn into high-value export-earning methanol to instead flow into the electricity system to help keep the lights on.

"This will help put downward pressure on electricity prices in the short term, but policymakers mustn’t be complacent about the real problem we face.

We don't have the fuel needed to run New Zealand’s energy system, and as a result, major energy users across the gas and electricity markets are reducing production just so gas and electricity markets can avoid major blackouts."

Meanwhile, Genesis Energy has said it is ramping up coal imports to help fill the energy shortage caused by reduced natural gas availability.

“Carnegie says finding our energy system lurching from crisis to increased dependence on industry coming to the rescue, and on imported coal, is an environmental own goal and an entirely predictable result of the former government’s shock oil and gas exploration ban in 2018.

"We need two things urgently. We need more gas exploration and appraisal activity. And we need new gas-fired power stations. Only these can reliably and affordably fill the energy gap when the hydro lake levels are low, and the wind isn’t blowing.

Without these our energy and industrial future is bleak."

Importing foreign gas isn’t the answer when we have abundant resources under our feet.

NZ has the talent and capabilities to develop and produce domestic gas more economically and with less of an environmental impact when compared to sourcing foreign gas and coal.

"We will get through this winter, but with the ongoing growth in the supply of renewable generation, we’ll need natural gas and gas-fired power stations even more to cover renewable intermittency.

Let’s hope our major exporters and regional employers can survive in the meantime."