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New Zealand gas industry

History

Gas has been used as a fuel in New Zealand since the 1860s when coal was burned to make gas at gasworks in the major towns and cities. Before electricity became available, this gas provided street lighting and was used for heating and cooking. The North Island gasworks closed down when natural gas became available there in 1969.

Before European settlement, Maori knew that oil existed in New Zealand. Early settlers found deposits of thick oil on the beach at New Plymouth. Digging a shaft to locate this oil began in 1865. When they reached a depth of about 20 feet the workmen could no longer work in the bottom of the shaft because of the natural gas. Further wells were dug and drilled but natural gas wasn't used until 1954.

In 1937, the Petroleum Act made the government the owner of all undeveloped oil and gas reservoirs. From that time, exploration and mining licences (issued by government) were needed to look for, and produce, oil and gas.

Almost all of New Zealand's natural gas has been found in Taranaki. The first large find was made by the Shell BP Todd consortium in 1959, near Kapuni. Natural gas was first produced from the Kapuni field, and distributed around the North Island, in 1971.

In 1969, the Shell BP Todd consortium drilled the first New Zealand offshore well and the Maui field was discovered, some 30 kilometres off the coast of Taranaki at a water depth of 108 metres. Production began in 1979. Natural gas is now one of New Zealand's primary energy resources and Maui alone now supplies about 80 per cent of our total gas requirements.

Structure

The New Zealand gas industry is made up of explorers, producers, high pressure transmission pipeline operators, low pressure pipeline operators, wholesalers, retailers and gas consumers.

Before deregulation, the Government owned all undeveloped gas reserves, was a producer of natural gas, purchased all gas from producers, was the operator of the high pressure pipelines and was the main consumer of gas (which it used to produce petrochemicals and generate electricity).

Gas industry reforms began in 1987 and now the government has sold most of its interests, although it is still the purchaser of all Maui gas production.

In New Zealand, 90 per cent of natural gas production comes from two gas fields: Maui (offshore) is mined by the Maui Mining Companies; and Kapuni (onshore) is mined by Shell and Todd. The remainder of the country's gas requirements come from a number of fields including the McKee, Kaimiro, Waihapa/Ngaere/Tariki/Ahuroa and Ngatoro fields.

The North Island high pressure gas transmission pipelines are owned and operated by Vector, with the exception of the Maui pipeline. This pipeline is owned by the Maui Mining Companies, but operated by Vector.

Vector and United Networks own most of the low pressure gas pipelines that distribute gas to end users.

The two largest retailers of gas are Contact Energy and Vector.

The largest users of gas in New Zealand are Contact Energy and Genesis Energy for electricity generation.