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4/13/2018 Member News
Gas has 'global role' in low-carbon transition - Methanex- (E&E News Subscription Required)

Gas has "global role" in low-carbon transition - Methanex

Felicity Wolfe- Fri, 13 Apr 2018 

Continued New Zealand methanol production is "positive" for this country's, and the world's, low­ carbon transition, Methanex New Zealand says.

It is "disappointed" the Government didn't consult with it about that benefit before deciding to end off­ shore gas exploration permit offers.

The firm strongly believes natural gas has a "global role" to play in reducing emissions and a transition to a lower-carbon economy.

It has previously noted its product is up to four-times ess carbon intensive [2] than methanol from Chinese operations which use coal as a core feed-stock and electricity from a much more fossil-fuel intensive power system.

Yesterday's announcement will not affect production at its Taranaki sites in the short term, but the move will have significant longer-term implications on energy security and investment, Methanex said in a statement.

The Vancouver-headquartered firm is this country's largest gas customer. It can use up to 88 petajoules annually at its Motunui and Waitara plants, where it last year produced almost 2 million tonnes [3]of methanol. It has said that if there are any major gas finds in the future it would invest in new plants to capitalise on those and this country's highly renewable electricity.

About 95 per cent of Methanex's New Zealand production is exported to Asia where it is widely used as an ingredient in consumer and industrial products ranging from resins used in building materials to polyesters for textiles.

Increasingly methanol is also prized in the region's crowded cities as a lower-carbon transport fuel with virtually nil particulate emissions.

"We will continue working with gas suppliers to understand what this means for their development plans and continue to seek meaningful dialogue with Government over the implications of this policy on Methanex, the broader industry and the Taranaki economy."

Industry implications

Prime Minister Jacinda Ardern yesterday announced the Government has halted offers of new offshore exploration permits. Speaking alongside Green Party Co-leader amd Climate Change Minsiter James Shaw and Regional Development Minister Shane Jones from New Zealand First, she pledged that any discoveries made in existing acreage will be developed.

The Government plans onshore block offers in Taranaki only for the next three years. That policy will be reviewed after that date.

The Major Gas Users' Group is calling for the Government to meet and discuss "all implications that might arise" from that. It wants to ensure gas's importance to the regional and national economy is

Clearly understood

MGUG spokesperson Richard Hale says the uncertainty cast over the "prospects for gas" will have long-term impacts on the group's members, including Ballance Agri-nutrients, Fonterra, New Zealand Steel, Oji Fibre Solutions and Refining NZ.

They rely upon a "secure and competitively-priced supply of significant quantities of natural gas to meet their energy and feedstock requirements", Hale says.

In the context of existing and pending long-term capital investments in gas plant, any supply uncertainty could require gas imports - something that has been proposed in the past, he says

Transition benefits

The group also highlights the "pivotal role" natural gas should play in New Zealand's transition to a lower-carbon economy.

In fact, Hale says, the country already benefits from domestic manufacturing which, in the case of primary products, has significantly lower global warming impacts than imports.

Port Taranaki chief executive Guy Roper says natural gas is a key to allowing "generational change" while developing new technology and evolving the economy. Such a significant change for the sector and its support industries needs consultation "so we can put in place a well thought-out plan to transition to a low carbon economy".

Roper describes yesterday's announcement as "unsettling" for Taranaki and New Zealand as the petroleum industry makes a significant contribution to the economy at regional and national levels.

"We believe this decision will have long-term impacts on export returns and associated jobs in Taranaki."

He says Port Taranaki will assess the implications as more information comes to hand while continuing to support the industry's exploration under existing permits.

International perspective

The president of the International Association of Geophysical Contractors says the Government's announcement "demonstrates a lack of consideration for the nation's energy future".

IAGC president Nikki Martin says the "abrupt" announcement "disrupts business certainty" rather than providing it.

Investments have already been made by companies anticipating future exploration activities in the country, she says.

"Unfortunately, this decision appears to have been made in a vacuum and without consultation or notification to the industry. The IAGC [4] urges the New Zealand government to reconsider this short­ sighted decision."

The Houston-based association, whose members include Schlumberger, Searcher Seismic, WesternGeco and Malaysian explorer Sapura Energy [5], says the decision also doesn't account for the industry's long history of safely and successfully co-existing with the marine environment.

Martin says seismic and exploration activities have been conducted extensively for more than 50 years alongside stable and even thriving marine life populations in New Zealand and globally.