1
00:00:00,280 --> 00:00:02,520
Speaker 1: The information provided in this program is of a general

2
00:00:02,600 --> 00:00:05,320
Speaker 1: nature and is not intended to be personalized financial advice.

3
00:00:05,400 --> 00:00:07,720
Speaker 1: We encourage you to seek appropriate advice from a qualified

4
00:00:07,760 --> 00:00:10,039
Speaker 1: professional to suit your individual circumstances.

5
00:00:10,320 --> 00:00:11,160
Speaker 2: We're running out.

6
00:00:11,080 --> 00:00:14,040
Speaker 1: Of gas and the shortage is setting some power companies

7
00:00:14,160 --> 00:00:17,919
Speaker 1: up to lose. The energy industry desperately needs a solution,

8
00:00:18,360 --> 00:00:20,120
Speaker 1: but it could cost investors.

9
00:00:21,200 --> 00:00:23,560
Speaker 2: In the indid just gas sector, we operate essentially six

10
00:00:23,640 --> 00:00:26,320
Speaker 2: fields and that accounts for ninety five percent of supply.

11
00:00:26,560 --> 00:00:28,960
Speaker 2: Each of those fields is in decline, but what happens

12
00:00:28,960 --> 00:00:32,519
Speaker 2: from here is deeply uncertain because the investment that's required

13
00:00:32,520 --> 00:00:36,519
Speaker 2: to stabilize, let alone to increase gas supply, is anything

14
00:00:36,560 --> 00:00:38,080
Speaker 2: but firm or confirmed.

15
00:00:48,400 --> 00:00:51,720
Speaker 1: We have a gas shortage on our hands. Supply nationally

16
00:00:51,840 --> 00:00:55,000
Speaker 1: is down and demand is up. The need for gas

17
00:00:55,040 --> 00:00:59,320
Speaker 1: from homes and industrial users is expected to continue outstripping

18
00:00:59,320 --> 00:01:02,600
Speaker 1: our production for the next three years, according to the

19
00:01:02,600 --> 00:01:07,679
Speaker 1: Government Ministry MBIE. The largest listed power company, Genesis, relies

20
00:01:07,720 --> 00:01:11,520
Speaker 1: on gas to efficiently power its Huntley station. Because of that,

21
00:01:11,760 --> 00:01:14,280
Speaker 1: it has a forty six percent stake in the Coupe

22
00:01:14,400 --> 00:01:17,880
Speaker 1: Oil and Gas field in the Tartanaki, but attempts to

23
00:01:17,920 --> 00:01:21,839
Speaker 1: extract more gas from it earlier this year failed, impacting

24
00:01:21,880 --> 00:01:25,319
Speaker 1: its finances materially and leaving it with no choice but

25
00:01:25,440 --> 00:01:29,080
Speaker 1: to import more coal. It has a stockpile of Huntley

26
00:01:29,080 --> 00:01:32,319
Speaker 1: of three hundred and fifty thousand tons of coal to

27
00:01:32,400 --> 00:01:35,600
Speaker 1: back up the electricity system at a time where hydro

28
00:01:35,680 --> 00:01:39,639
Speaker 1: lakes are low and wind farms haven't kept up. Unlike oil,

29
00:01:39,760 --> 00:01:43,120
Speaker 1: we don't import any gas into New Zealand. We rely

30
00:01:43,280 --> 00:01:46,959
Speaker 1: solely on extracting it from our fields. But production at

31
00:01:47,000 --> 00:01:50,960
Speaker 1: all of the major fields is declining, despite companies investing

32
00:01:50,960 --> 00:01:54,800
Speaker 1: about one billion dollars into them over the past three years.

33
00:01:55,160 --> 00:01:58,120
Speaker 1: Add to that, our gas reserves have declined to a

34
00:01:58,200 --> 00:02:02,120
Speaker 1: record low. As a result, gas wholesale prices have shot

35
00:02:02,200 --> 00:02:05,400
Speaker 1: up to a new record, while some of our power

36
00:02:05,440 --> 00:02:09,160
Speaker 1: companies do sell retail gas. Ultimately, none of this is

37
00:02:09,200 --> 00:02:14,040
Speaker 1: ideal for the energy industry, especially those exposed to spot prices.

38
00:02:14,680 --> 00:02:18,240
Speaker 1: John ked is the head of research at independent firm Analystica.

39
00:02:18,600 --> 00:02:20,040
Speaker 1: He's sounding the alarm.

40
00:02:20,520 --> 00:02:21,120
Speaker 2: He says the.

41
00:02:21,160 --> 00:02:24,839
Speaker 1: Energy industry is in deep distress, but a solution could

42
00:02:25,040 --> 00:02:26,000
Speaker 1: still be found.

43
00:02:27,800 --> 00:02:28,960
Speaker 2: John, thanks much for coming in.

44
00:02:29,160 --> 00:02:30,639
Speaker 3: Good to see you. Good morning.

45
00:02:31,120 --> 00:02:34,920
Speaker 1: It looks pretty ugly on paper, the supply and demand picture,

46
00:02:35,160 --> 00:02:37,000
Speaker 1: how would you describe it? How bad actually is it?

47
00:02:38,160 --> 00:02:39,520
Speaker 3: That's probably a fair assessment.

48
00:02:39,560 --> 00:02:42,560
Speaker 2: I think, you know, if the market's always right, then

49
00:02:42,600 --> 00:02:44,400
Speaker 2: the markets are telling us that it hasn't been this bad.

50
00:02:44,919 --> 00:02:46,800
Speaker 3: I think probably. Ever, so, we've.

51
00:02:46,560 --> 00:02:50,000
Speaker 2: Got gas pricing which is towards forty dollars a good you.

52
00:02:50,040 --> 00:02:53,560
Speaker 2: We've got electricity prices which are tapping through five hundred dollars.

53
00:02:53,639 --> 00:02:56,679
Speaker 2: I mean of what our next month. In both cases,

54
00:02:56,840 --> 00:03:00,560
Speaker 2: I've not seen it that bad. These are present enter

55
00:03:00,600 --> 00:03:02,960
Speaker 2: type prices. So if the market's right, then we're in

56
00:03:03,000 --> 00:03:05,480
Speaker 2: a state of some distress. How are we here?

57
00:03:05,760 --> 00:03:08,000
Speaker 1: Like seriously, I feel like this happens every single year.

58
00:03:08,000 --> 00:03:11,400
Speaker 1: We talk about resilience of the electricity system and how

59
00:03:11,400 --> 00:03:13,120
Speaker 1: we need to do better, which is why these companies

60
00:03:13,120 --> 00:03:16,000
Speaker 1: are spending billions of dollars on renewable energy. Yet in

61
00:03:16,040 --> 00:03:17,800
Speaker 1: twenty twenty four it's the worst it's ever being.

62
00:03:19,200 --> 00:03:21,600
Speaker 2: Yeah, So, I mean it's never one single factor. There's

63
00:03:21,600 --> 00:03:23,639
Speaker 2: a lot of build going on, but there is always

64
00:03:24,040 --> 00:03:27,280
Speaker 2: a compound of all sorts of things happening at the

65
00:03:27,320 --> 00:03:29,920
Speaker 2: same time, and those are supply driven.

66
00:03:29,960 --> 00:03:31,280
Speaker 3: Sure, we're building a new plant.

67
00:03:31,120 --> 00:03:34,000
Speaker 2: Plant is extremely slow and expensive to build, and it's

68
00:03:34,040 --> 00:03:37,440
Speaker 2: been someone hamstrung over the last few years by uncertainty

69
00:03:37,440 --> 00:03:39,920
Speaker 2: across the sector. So we've now got TI having confirmed

70
00:03:39,960 --> 00:03:40,680
Speaker 2: what they've confirmed.

71
00:03:40,680 --> 00:03:41,080
Speaker 3: That's great.

72
00:03:41,080 --> 00:03:42,880
Speaker 2: We can move on and have some certainty around demand

73
00:03:42,960 --> 00:03:45,000
Speaker 2: on the South Island and there are investment that has

74
00:03:45,040 --> 00:03:45,880
Speaker 2: been made on the back of that.

75
00:03:46,200 --> 00:03:49,720
Speaker 3: In the meantime, the market's got to keep itself whole.

76
00:03:49,760 --> 00:03:53,840
Speaker 2: And we're running now at very low rates of water storage.

77
00:03:54,640 --> 00:03:56,400
Speaker 2: When you don't have water, you need to fill the

78
00:03:56,440 --> 00:04:00,920
Speaker 2: system with less preferred fuel down to the likes of

79
00:04:01,560 --> 00:04:03,920
Speaker 2: in particular gas, which is indigenous. We used to have

80
00:04:03,920 --> 00:04:05,480
Speaker 2: a gas sector that provide a plenty of gas. We

81
00:04:05,520 --> 00:04:08,120
Speaker 2: don't anymore, and you know, if that's filing, then you

82
00:04:08,160 --> 00:04:09,839
Speaker 2: need to bring in cold and make up the last mile.

83
00:04:09,920 --> 00:04:13,800
Speaker 2: Both of those things are happening, but the system itself,

84
00:04:13,800 --> 00:04:15,920
Speaker 2: the electricity system self, is very stress and just being

85
00:04:15,960 --> 00:04:18,719
Speaker 2: able to cope with that much fuel and capacity not

86
00:04:18,760 --> 00:04:21,720
Speaker 2: being insisted at the same time. So yeah, if you

87
00:04:21,760 --> 00:04:23,960
Speaker 2: look further upstream, there's a lot of attentionally brought to

88
00:04:24,000 --> 00:04:28,120
Speaker 2: gas and that's absolutely fair to do that. It's not

89
00:04:28,200 --> 00:04:30,200
Speaker 2: through a lack of investment we've had four or five

90
00:04:30,320 --> 00:04:31,359
Speaker 2: years of very heavy.

91
00:04:31,200 --> 00:04:31,960
Speaker 3: Investment the gas sect.

92
00:04:32,040 --> 00:04:34,120
Speaker 2: Unfortunately, the investment just hasn't come off, and we're in

93
00:04:34,160 --> 00:04:37,039
Speaker 2: a gas market which is probably forty percent lower than

94
00:04:37,080 --> 00:04:39,080
Speaker 2: what we had extracted a couple of years ago. And

95
00:04:39,120 --> 00:04:43,120
Speaker 2: that's flowing directly through into electricity because you know, when

96
00:04:43,120 --> 00:04:45,159
Speaker 2: you're so low on water, you need something else to

97
00:04:45,160 --> 00:04:49,040
Speaker 2: fill it in. Okay, we've got megawats available as hardly

98
00:04:49,080 --> 00:04:51,680
Speaker 2: and as other thermal plant. Those megawhites are only as

99
00:04:51,720 --> 00:04:53,120
Speaker 2: good as the fuel you can put through, and that's

100
00:04:53,120 --> 00:04:53,919
Speaker 2: where we're short.

101
00:04:54,440 --> 00:04:57,720
Speaker 1: If we look at that supply demand balance equation, how

102
00:04:57,839 --> 00:05:01,000
Speaker 1: much has supply dropped and how much has demand increased.

103
00:05:01,839 --> 00:05:04,560
Speaker 2: So if we look separate at gas and electricity, if

104
00:05:04,640 --> 00:05:08,080
Speaker 2: the look at gas first, a full market for gas

105
00:05:08,120 --> 00:05:11,000
Speaker 2: in New Zealand is north of five hundred terr dules

106
00:05:11,000 --> 00:05:12,760
Speaker 2: a day, so it's north of two hundred peed of

107
00:05:12,839 --> 00:05:14,440
Speaker 2: dwels a year. That's what most people have in their

108
00:05:14,440 --> 00:05:19,080
Speaker 2: head when there were forecasts put into the sector two

109
00:05:19,160 --> 00:05:20,800
Speaker 2: years ago. So when all this work that I was

110
00:05:20,800 --> 00:05:22,960
Speaker 2: talking about upstream, it's been about fifty wells drilled in

111
00:05:23,000 --> 00:05:24,840
Speaker 2: the last few years, a couple of billion dollars has

112
00:05:24,880 --> 00:05:27,480
Speaker 2: gone into the ground. So the operators have not been

113
00:05:27,520 --> 00:05:29,479
Speaker 2: sitting on their hands. They've been putting money into the ground.

114
00:05:29,760 --> 00:05:31,800
Speaker 2: That investment just hasn't come off. That's the nature of

115
00:05:31,800 --> 00:05:32,240
Speaker 2: the will.

116
00:05:32,080 --> 00:05:32,800
Speaker 3: And gas business.

117
00:05:34,080 --> 00:05:37,120
Speaker 2: So instead of being that two hundred plus pjaear market

118
00:05:37,360 --> 00:05:39,080
Speaker 2: in fact two years ago was forecast to be two

119
00:05:39,120 --> 00:05:41,520
Speaker 2: hundred and fifteen ped of jwels, this year we're forecasting

120
00:05:41,520 --> 00:05:43,839
Speaker 2: something you're order one hundred and twenty. So with that,

121
00:05:43,960 --> 00:05:47,839
Speaker 2: you know you've got forty percent reduction or a supply

122
00:05:47,960 --> 00:05:49,880
Speaker 2: that is just not there. And we don't have the

123
00:05:49,960 --> 00:05:52,400
Speaker 2: ability to be fungible with gas. We don't import it.

124
00:05:52,800 --> 00:05:54,880
Speaker 2: That's a separate discussion. Suppose whether or not we should.

125
00:05:54,880 --> 00:05:55,720
Speaker 1: We will talk about that.

126
00:05:56,800 --> 00:05:59,720
Speaker 2: So when you don't have that fungability, demand has to

127
00:05:59,720 --> 00:06:02,359
Speaker 2: shrink to be able to meet supply. That's exactly what's happening.

128
00:06:02,600 --> 00:06:04,400
Speaker 2: So what the most worrying expect I think at the

129
00:06:04,400 --> 00:06:07,520
Speaker 2: moment of the entire energy system here is that we're

130
00:06:07,520 --> 00:06:13,200
Speaker 2: getting very heavy curtailments from major industrial users to adjust

131
00:06:13,240 --> 00:06:16,279
Speaker 2: the sector to the short supply. So we've seen ty

132
00:06:16,360 --> 00:06:18,320
Speaker 2: coin coming off by well now it's going to be

133
00:06:18,320 --> 00:06:20,520
Speaker 2: about one hundred and eighty megawatts of their five eighty

134
00:06:20,520 --> 00:06:24,560
Speaker 2: odd so they're down about a quarter. The biggest harm

135
00:06:24,640 --> 00:06:27,279
Speaker 2: is coming through Methodics, so they are the biggest gas uses.

136
00:06:27,120 --> 00:06:28,160
Speaker 3: In the market. They are normally.

137
00:06:29,560 --> 00:06:31,800
Speaker 2: In fact, both of those operations are billion dollar exporters,

138
00:06:32,080 --> 00:06:34,560
Speaker 2: and Methics is running at less than thirty percent now

139
00:06:34,600 --> 00:06:36,680
Speaker 2: capacity because they just don't have the gas available to

140
00:06:36,720 --> 00:06:38,880
Speaker 2: them to be able to make up their operations. So

141
00:06:39,839 --> 00:06:42,799
Speaker 2: this is big export receipts that are not being printed.

142
00:06:43,000 --> 00:06:46,359
Speaker 2: We already have the worst or certainly among the worst

143
00:06:46,440 --> 00:06:48,800
Speaker 2: balance of payments in the Western world. We've got a

144
00:06:48,839 --> 00:06:52,200
Speaker 2: problem with GDP, We've got a problem with production, where

145
00:06:52,560 --> 00:06:55,880
Speaker 2: these energy shortages are feeding directly into the ability of

146
00:06:55,920 --> 00:06:58,720
Speaker 2: the industrial base to keep on doing what they do.

147
00:06:59,000 --> 00:07:02,039
Speaker 1: I do want to talk to you about potential import solutions,

148
00:07:02,040 --> 00:07:03,279
Speaker 1: because I know that you are king to make a

149
00:07:03,279 --> 00:07:05,800
Speaker 1: little bit of noise on a potential alerg terminal, so

150
00:07:05,920 --> 00:07:07,960
Speaker 1: I promise we will talk about that. But if we

151
00:07:08,040 --> 00:07:10,680
Speaker 1: just look at supply, still a non production. It's failed,

152
00:07:10,720 --> 00:07:13,680
Speaker 1: not because of lack of trying. But one question I

153
00:07:13,760 --> 00:07:17,320
Speaker 1: have is storage. I believe only contact energy has a

154
00:07:17,360 --> 00:07:20,400
Speaker 1: storage facility in the new Zealand market. Why have we

155
00:07:20,480 --> 00:07:22,960
Speaker 1: failed on storage? Why aren't we keeping the stuff on site?

156
00:07:22,960 --> 00:07:25,720
Speaker 2: So you're almost specifically about gas again, what's often missed

157
00:07:25,800 --> 00:07:27,320
Speaker 2: is that, you know, we do have storage here in

158
00:07:27,320 --> 00:07:29,840
Speaker 2: New Zealand. Most of it for the electricity secretly comes

159
00:07:29,840 --> 00:07:32,440
Speaker 2: on the way of hydro and you know, we're very

160
00:07:32,520 --> 00:07:35,480
Speaker 2: low on hydro right now, we're looking at the screen

161
00:07:35,520 --> 00:07:38,600
Speaker 2: this morning. La Manipuria is about three percent full at

162
00:07:38,600 --> 00:07:41,680
Speaker 2: the moment. You know, that's in other words, it's almost empty.

163
00:07:42,480 --> 00:07:44,800
Speaker 2: So you know, across the hydro system now our storage

164
00:07:44,840 --> 00:07:46,480
Speaker 2: is very low. That's where you start moving down the

165
00:07:46,480 --> 00:07:49,120
Speaker 2: line and picking up on storage that is inferior frankly

166
00:07:49,240 --> 00:07:52,040
Speaker 2: because it's expensive and involves fossil fuels. Nobody, you know,

167
00:07:52,040 --> 00:07:55,320
Speaker 2: we everyoney's trying to move away from that. But you

168
00:07:55,400 --> 00:07:56,880
Speaker 2: do what you have to do, so we move into

169
00:07:57,040 --> 00:07:59,920
Speaker 2: gas storage. You're right, Hurrah is the only gas storage

170
00:08:00,040 --> 00:08:02,040
Speaker 2: silly in New Zealand, and it's got its own issues

171
00:08:02,040 --> 00:08:04,480
Speaker 2: around performance. That just hasn't been behaving is what it

172
00:08:04,560 --> 00:08:06,680
Speaker 2: was expected to be in the last while. And to

173
00:08:06,800 --> 00:08:08,440
Speaker 2: have storage you need to have molecules to be able

174
00:08:08,440 --> 00:08:10,080
Speaker 2: to put into it, and that's what we're also lacking.

175
00:08:10,120 --> 00:08:11,960
Speaker 3: We don't have gas to be able to put.

176
00:08:11,840 --> 00:08:13,880
Speaker 2: Into storage, you know, put your eggs into a basket

177
00:08:13,960 --> 00:08:15,840
Speaker 2: during summer when demand is low and then bring it

178
00:08:15,840 --> 00:08:19,440
Speaker 2: out during winter. That's just not a cycling ability that

179
00:08:19,480 --> 00:08:21,960
Speaker 2: we have. Okay, so gas is compromised. Then you move

180
00:08:21,960 --> 00:08:24,000
Speaker 2: into what storage is left. And we're talking with the

181
00:08:24,040 --> 00:08:27,080
Speaker 2: cold stockpile and hunting. And that's, whether you like it

182
00:08:27,200 --> 00:08:29,720
Speaker 2: or not, that's the last mile. And we have seen

183
00:08:29,800 --> 00:08:32,679
Speaker 2: resumption of impults coming into the country and just the

184
00:08:32,760 --> 00:08:34,079
Speaker 2: last month or so, and I say, there's going to

185
00:08:34,120 --> 00:08:36,080
Speaker 2: cary around for some time because that's what the system

186
00:08:36,120 --> 00:08:38,839
Speaker 2: needs to make up for the deficit of fuel, which

187
00:08:38,880 --> 00:08:40,120
Speaker 2: is further up the chain.

188
00:08:40,320 --> 00:08:42,880
Speaker 1: Bottom line, is cheaper and easier to stockpile coal than

189
00:08:42,920 --> 00:08:43,720
Speaker 1: it is gas.

190
00:08:43,800 --> 00:08:51,600
Speaker 2: Yeah, well you can't stockpile you know. If you look

191
00:08:51,600 --> 00:08:54,440
Speaker 2: at the cold stockpile, it provides very deep storage and

192
00:08:54,480 --> 00:08:56,720
Speaker 2: you can see it, touch it, it's there, it's above ground.

193
00:08:56,720 --> 00:09:01,199
Speaker 2: There's pretty much no risk associated with it. It is

194
00:09:01,280 --> 00:09:05,120
Speaker 2: a relatively cheap option at the moment compared to other alternatives.

195
00:09:05,679 --> 00:09:07,920
Speaker 2: If you look at electricity prices at the moment, it's

196
00:09:07,960 --> 00:09:12,680
Speaker 2: actually relatively economic to use that fuel. But it's the

197
00:09:12,760 --> 00:09:15,080
Speaker 2: last fuel you want to use for all the obvious reasons,

198
00:09:15,440 --> 00:09:19,079
Speaker 2: but it's what the system needs. So you know, everybody

199
00:09:19,160 --> 00:09:23,600
Speaker 2: wants to store more preferential fuels. Everyone wants more hydro. Okay,

200
00:09:23,600 --> 00:09:25,959
Speaker 2: we're not there. Every year is you know, people talking

201
00:09:25,960 --> 00:09:28,320
Speaker 2: about mean hydra a lot. It's just a concept. Every

202
00:09:28,400 --> 00:09:31,640
Speaker 2: year is different to mean hydro. Last year and the

203
00:09:31,679 --> 00:09:33,679
Speaker 2: year before, we had a huge amount of water in

204
00:09:33,720 --> 00:09:36,000
Speaker 2: the system. We've got very little water in the system,

205
00:09:36,160 --> 00:09:37,920
Speaker 2: and that's what's going to happen with climate change. You're

206
00:09:37,920 --> 00:09:40,320
Speaker 2: going to get volatility all over the place. So we've

207
00:09:40,320 --> 00:09:42,120
Speaker 2: got a lot less water this year. And there's been

208
00:09:42,160 --> 00:09:48,640
Speaker 2: this oh here we are type realization this year. And

209
00:09:48,720 --> 00:09:52,880
Speaker 2: because we have so much less zero cost fuel in storage, okay,

210
00:09:52,880 --> 00:09:54,000
Speaker 2: you've got to go further down.

211
00:09:53,880 --> 00:09:55,040
Speaker 3: The line and keep paying.

212
00:09:55,160 --> 00:09:58,320
Speaker 2: But even then your capacity constrained by how much fuel

213
00:09:58,440 --> 00:10:02,320
Speaker 2: you can put through the system. When essentially you're reliant

214
00:10:02,360 --> 00:10:05,160
Speaker 2: on the in type energy from other countries to be

215
00:10:05,160 --> 00:10:07,079
Speaker 2: able to keep the system whole. Indigenous gas is a

216
00:10:07,080 --> 00:10:09,160
Speaker 2: big problem, and that's the that's kind of the middle

217
00:10:09,240 --> 00:10:12,160
Speaker 2: ranking fuel storage that we have always were fuel and

218
00:10:12,280 --> 00:10:14,280
Speaker 2: storage separate concepts.

219
00:10:14,520 --> 00:10:15,560
Speaker 3: That's where we've always.

220
00:10:15,320 --> 00:10:17,760
Speaker 2: Sort of looked to as a sector in the past

221
00:10:18,280 --> 00:10:19,239
Speaker 2: that's now compromised.

222
00:10:19,240 --> 00:10:20,480
Speaker 3: Okay, we've got to go back to cole.

223
00:10:20,880 --> 00:10:23,360
Speaker 1: I'm interested in demand response because this is something that

224
00:10:23,400 --> 00:10:25,760
Speaker 1: we've seen a lot of in recent months. We know

225
00:10:25,800 --> 00:10:28,200
Speaker 1: that t Y has been told to reduce some of

226
00:10:28,200 --> 00:10:30,880
Speaker 1: its demand on the system, and even households have been

227
00:10:30,920 --> 00:10:33,880
Speaker 1: asked to not use the heaters, not charge their phones.

228
00:10:35,240 --> 00:10:36,840
Speaker 2: Oh how will we live? John?

229
00:10:37,640 --> 00:10:40,120
Speaker 1: But seriously, I mean this is a pretty big problem.

230
00:10:40,240 --> 00:10:42,960
Speaker 1: What should we expect to see in both household and

231
00:10:43,040 --> 00:10:44,440
Speaker 1: industrial demand response?

232
00:10:45,559 --> 00:10:49,160
Speaker 2: So yeah, demand response is a you know, you often

233
00:10:49,200 --> 00:10:51,720
Speaker 2: hear the concept demand response and you often hear it

234
00:10:51,760 --> 00:10:54,280
Speaker 2: talked of pretty positively because I wasn't a good where

235
00:10:54,280 --> 00:10:56,640
Speaker 2: we're able to help soften the blow on the rest

236
00:10:56,640 --> 00:10:58,720
Speaker 2: of the sector, you know, the bottom light. And we

237
00:10:58,800 --> 00:11:00,880
Speaker 2: take a pretty dim view on demand response because the

238
00:11:00,920 --> 00:11:02,960
Speaker 2: reason I said before, what it requires is that our

239
00:11:03,040 --> 00:11:06,440
Speaker 2: largest industrial users have to back off production. So that's

240
00:11:06,480 --> 00:11:08,920
Speaker 2: not ideal, as far from ideal. Okay, it helps keep

241
00:11:09,000 --> 00:11:13,280
Speaker 2: the system whole, but in the meantime you're foregoing export receipts,

242
00:11:13,320 --> 00:11:16,240
Speaker 2: GDP jobs, all of that sort of thing, and increasing

243
00:11:16,320 --> 00:11:20,560
Speaker 2: uncertainty for those users downstream, many of which actually you're

244
00:11:20,559 --> 00:11:23,319
Speaker 2: still are just fundamentally struggling with the viability of staying alive.

245
00:11:23,320 --> 00:11:24,840
Speaker 3: At the moment, we've got to say.

246
00:11:24,720 --> 00:11:26,280
Speaker 2: We've got the highest electricity prices in the world and

247
00:11:26,320 --> 00:11:28,480
Speaker 2: hight gas price in the world. It's really tough for

248
00:11:28,520 --> 00:11:30,839
Speaker 2: an export business to be able to navigate, let alone,

249
00:11:30,880 --> 00:11:33,280
Speaker 2: when you're getting supply taken away from you. You know,

250
00:11:33,320 --> 00:11:36,480
Speaker 2: it's almost the worst possible scenario for them at the

251
00:11:36,520 --> 00:11:39,480
Speaker 2: moment in terms of the users elsewhere in the system,

252
00:11:39,600 --> 00:11:42,800
Speaker 2: residential consumers that they're always the last mile to have

253
00:11:42,920 --> 00:11:45,839
Speaker 2: to deal with. It's actually a relatively certainly in gas terms,

254
00:11:45,880 --> 00:11:49,040
Speaker 2: it's a relatively small part of the equation, about seven

255
00:11:49,040 --> 00:11:50,120
Speaker 2: PJ year of demand.

256
00:11:50,120 --> 00:11:51,000
Speaker 3: As in a market one.

257
00:11:51,000 --> 00:11:54,240
Speaker 2: Hundred and fifty the old days two hundreds, those users

258
00:11:54,280 --> 00:11:58,440
Speaker 2: I think will always be held firm and supply will

259
00:11:58,440 --> 00:12:00,680
Speaker 2: never be an issue for them. But now getting into

260
00:12:00,679 --> 00:12:02,719
Speaker 2: the space of Okay, Dematosmons has had the very big

261
00:12:02,800 --> 00:12:03,280
Speaker 2: end of town.

262
00:12:04,240 --> 00:12:05,160
Speaker 3: What happens from here?

263
00:12:05,200 --> 00:12:08,840
Speaker 2: There is increasing word in the market around users that

264
00:12:08,880 --> 00:12:12,000
Speaker 2: are smaller, that are facing their own problems and getting

265
00:12:13,200 --> 00:12:15,560
Speaker 2: firstly access to guess let alone at a price that

266
00:12:15,600 --> 00:12:18,880
Speaker 2: works for them, So that the risk is as we

267
00:12:18,920 --> 00:12:21,600
Speaker 2: move forward that the demand responsor we've seen in the

268
00:12:21,640 --> 00:12:25,040
Speaker 2: market sort of socializes more and becomes more embedded, which

269
00:12:25,080 --> 00:12:25,720
Speaker 2: is a real worry.

270
00:12:26,440 --> 00:12:28,920
Speaker 1: So why don't we import the stuff we import oil?

271
00:12:29,080 --> 00:12:31,320
Speaker 1: Why don't we import gas? It seems crazy to me.

272
00:12:31,760 --> 00:12:34,600
Speaker 2: Well, that's a conversation that's starting to move.

273
00:12:34,520 --> 00:12:34,920
Speaker 3: Up a bit.

274
00:12:35,000 --> 00:12:37,680
Speaker 1: But how is that conversation only happening now? Why have

275
00:12:37,720 --> 00:12:40,560
Speaker 1: we never considered importing it and having import terminals earlier?

276
00:12:40,720 --> 00:12:42,200
Speaker 3: It has been considered twenty years ago.

277
00:12:42,280 --> 00:12:44,680
Speaker 2: It was specifically considered when we went through our last

278
00:12:46,000 --> 00:12:48,840
Speaker 2: boys have tried and avoid the word crisis, But twenty

279
00:12:48,880 --> 00:12:52,960
Speaker 2: odd years ago we had a very different but in

280
00:12:53,000 --> 00:12:56,520
Speaker 2: some ways similar situation where gas supply fell off very quickly,

281
00:12:56,600 --> 00:12:58,640
Speaker 2: and there was a project back of that time that

282
00:12:58,760 --> 00:13:00,440
Speaker 2: was led by Contact and Genesis to look at an

283
00:13:00,480 --> 00:13:04,000
Speaker 2: alergy import facility down in Tarannaki. Interesting and they didn't

284
00:13:04,040 --> 00:13:05,480
Speaker 2: go with it. Obviously I didn't go with it for

285
00:13:05,480 --> 00:13:07,560
Speaker 2: a bunch of reasons. It was a very expensive concept.

286
00:13:07,720 --> 00:13:10,679
Speaker 2: It was permanent, so it would be you know, it

287
00:13:10,720 --> 00:13:15,240
Speaker 2: would be here forever on shore, and in the ends

288
00:13:15,280 --> 00:13:17,880
Speaker 2: that facility wasn't required because we saw new gas come

289
00:13:18,200 --> 00:13:21,559
Speaker 2: into the system from particularly Poeker and Coupe not long

290
00:13:21,600 --> 00:13:24,679
Speaker 2: after that. We're now in a different place, and frankly,

291
00:13:24,760 --> 00:13:27,360
Speaker 2: the technology that was involved now is entirely different to

292
00:13:27,360 --> 00:13:29,439
Speaker 2: what was talking to of twenty years ago. It's now floating,

293
00:13:29,520 --> 00:13:33,800
Speaker 2: modular costs are very controllable, and it's very mature technology.

294
00:13:33,800 --> 00:13:35,640
Speaker 3: Twenty years ago that just wasn't the case.

295
00:13:36,080 --> 00:13:38,440
Speaker 2: So nowadays, when we talk about guess import, we're talking about,

296
00:13:39,920 --> 00:13:41,559
Speaker 2: you know, in a very simplest terms of bestall that

297
00:13:41,600 --> 00:13:43,920
Speaker 2: would sit somewhere on a port.

298
00:13:43,920 --> 00:13:47,079
Speaker 3: That connects into our gas distribution network.

299
00:13:47,120 --> 00:13:49,280
Speaker 2: So whether we're talking the lights of Marston Point Port,

300
00:13:49,320 --> 00:13:54,360
Speaker 2: Taranniki import of Towering, these are options, and in much

301
00:13:54,400 --> 00:13:56,400
Speaker 2: the same way that we get cargoes of coal would

302
00:13:56,400 --> 00:13:59,000
Speaker 2: come into the country, cargoes of gas would come in

303
00:13:59,200 --> 00:14:02,280
Speaker 2: offload into this vessel, and this vessel would essentially take

304
00:14:02,320 --> 00:14:04,000
Speaker 2: this gas from its frozen state, warm it up and

305
00:14:04,000 --> 00:14:06,800
Speaker 2: put it into the system. So it adds capacity, it

306
00:14:06,800 --> 00:14:09,760
Speaker 2: adds gas into the system, but probably more importantly, it

307
00:14:09,760 --> 00:14:14,400
Speaker 2: adds dynamic storage, so you're able to bleed or pump

308
00:14:14,520 --> 00:14:17,480
Speaker 2: gas into the system from as little as zero close

309
00:14:17,480 --> 00:14:20,280
Speaker 2: to zero terri dules a day through to five hundred

310
00:14:20,280 --> 00:14:21,480
Speaker 2: a day if you really want to, which is the

311
00:14:21,560 --> 00:14:24,280
Speaker 2: entire New Zealand gas market. So it could cover the

312
00:14:24,360 --> 00:14:26,280
Speaker 2: entire market if it needed to, which it will never

313
00:14:26,360 --> 00:14:28,600
Speaker 2: need to, but it's nice to know that it could.

314
00:14:29,160 --> 00:14:33,080
Speaker 1: Effectively. It's like a floating storage terminal on a pork.

315
00:14:33,600 --> 00:14:34,920
Speaker 3: Yeah, yeah, that's right.

316
00:14:35,240 --> 00:14:37,760
Speaker 2: There's some instructure on board that handles the gas. So

317
00:14:37,840 --> 00:14:40,480
Speaker 2: the gas is cryogenic, it's frozen, it's a minsu one

318
00:14:40,520 --> 00:14:43,560
Speaker 2: hundred eight degrees centegrade. It's you know, it's heavily condensed.

319
00:14:43,560 --> 00:14:45,720
Speaker 2: That's the whole point of it. And each cargo holds

320
00:14:45,720 --> 00:14:48,480
Speaker 2: about four pedagills of gas, and these cargoes apply the

321
00:14:48,520 --> 00:14:52,360
Speaker 2: world all the time. The boalergy is now essentially very

322
00:14:52,400 --> 00:14:55,360
Speaker 2: slid to crude oil. There's a deep spot market PHALERGI.

323
00:14:55,440 --> 00:14:57,800
Speaker 2: You can get it when you need it. It's actually about,

324
00:14:58,400 --> 00:15:01,360
Speaker 2: in today's numbers, about half the price some indigenous spot gas.

325
00:15:01,360 --> 00:15:03,080
Speaker 2: So if you go and buy a molecular gas from

326
00:15:03,120 --> 00:15:06,000
Speaker 2: the spot market today, you'll generally pay about twice the

327
00:15:06,040 --> 00:15:07,840
Speaker 2: price of what you could get it into the country

328
00:15:07,840 --> 00:15:09,480
Speaker 2: and into the system for a few to import it.

329
00:15:09,960 --> 00:15:12,160
Speaker 2: So there's quite a bit that's attractive about it, given

330
00:15:12,200 --> 00:15:15,720
Speaker 2: the extent of distress we're now in, and there's frankly

331
00:15:15,720 --> 00:15:17,520
Speaker 2: nothing unusual about us importing energy.

332
00:15:17,640 --> 00:15:19,480
Speaker 3: We do it being time and drive home. It's on.

333
00:15:20,120 --> 00:15:22,480
Speaker 2: It's important refined oil that's sitting inside your petro tank.

334
00:15:23,400 --> 00:15:26,080
Speaker 2: To an extent, that's also a little the case with

335
00:15:26,160 --> 00:15:28,600
Speaker 2: your ev as well electricity. You know, it is cold

336
00:15:28,880 --> 00:15:30,720
Speaker 2: seven hundred and fifty megs wants of coal at the moment,

337
00:15:30,760 --> 00:15:34,360
Speaker 2: and hardly that's keeping system alive. So there's nothing unusually

338
00:15:34,360 --> 00:15:36,840
Speaker 2: about importing energy. You just want to import the best

339
00:15:36,960 --> 00:15:39,800
Speaker 2: energy that you can that works the best for your system.

340
00:15:39,640 --> 00:15:42,480
Speaker 1: On a cost benefit analysis for the energy companies that

341
00:15:42,920 --> 00:15:45,240
Speaker 1: and especially for the industrial users that need the gas

342
00:15:45,320 --> 00:15:48,360
Speaker 1: right now, it seems like you know a pretty easy, simple,

343
00:15:48,400 --> 00:15:49,240
Speaker 1: obvious solution.

344
00:15:49,440 --> 00:15:50,000
Speaker 3: So who pay you?

345
00:15:51,160 --> 00:15:54,080
Speaker 2: That's an open conversation. So we're just at the moment

346
00:15:54,240 --> 00:15:56,000
Speaker 2: just launching to the next stage of week. We did

347
00:15:56,000 --> 00:15:57,840
Speaker 2: a big piece of it last year, just a concept

348
00:15:57,880 --> 00:16:01,240
Speaker 2: type paper, and we're out finally, well, we're asked to

349
00:16:01,280 --> 00:16:02,440
Speaker 2: do it for a reason, and.

350
00:16:03,760 --> 00:16:05,520
Speaker 3: This has all come together a lot quicker than what

351
00:16:05,560 --> 00:16:06,160
Speaker 3: we're expecting.

352
00:16:06,280 --> 00:16:09,200
Speaker 1: Bottom line, we need a solution is the desire out

353
00:16:09,200 --> 00:16:12,280
Speaker 1: there in the energy industry to invest. You mentioned that

354
00:16:12,320 --> 00:16:14,840
Speaker 1: they've spent billions of dollars over the past few years

355
00:16:15,000 --> 00:16:17,840
Speaker 1: into the existing oil and gas field and they've come

356
00:16:17,920 --> 00:16:20,240
Speaker 1: up dry. Are they going to give up and just exit?

357
00:16:20,320 --> 00:16:24,400
Speaker 2: Now that's a very open question. You know, I literally

358
00:16:24,480 --> 00:16:27,760
Speaker 2: do not know where those decisions are at. We have

359
00:16:27,840 --> 00:16:30,960
Speaker 2: a very shallow investor pool now left over after the

360
00:16:31,000 --> 00:16:35,240
Speaker 2: events of we Have twenty eighteen. The expiration ban was

361
00:16:35,600 --> 00:16:40,040
Speaker 2: somewhat catastrophic for the sector. It saw a widespread exit

362
00:16:40,080 --> 00:16:41,960
Speaker 2: of investors from the UPSTRM space and like I say,

363
00:16:42,000 --> 00:16:46,800
Speaker 2: we've got three, possibly four large investors left, and most

364
00:16:46,840 --> 00:16:48,360
Speaker 2: of them the heavy lifting when it comes to the

365
00:16:48,400 --> 00:16:51,720
Speaker 2: investment decisions that take place around those three of four

366
00:16:51,720 --> 00:16:56,160
Speaker 2: investors are taken offshore. So the biggest player in that

367
00:16:56,280 --> 00:17:02,320
Speaker 2: space is OMV, Austrian company. And forrankly, New Zealand has

368
00:17:02,760 --> 00:17:05,680
Speaker 2: lost its attraction over the last few years because of

369
00:17:05,760 --> 00:17:07,920
Speaker 2: the direction of political travel in the last two terms

370
00:17:07,920 --> 00:17:08,320
Speaker 2: of government.

371
00:17:08,359 --> 00:17:10,440
Speaker 3: So you know, to take away.

372
00:17:12,720 --> 00:17:15,640
Speaker 2: New Zealand is now a country that has risked gone,

373
00:17:15,760 --> 00:17:17,840
Speaker 2: whereas previously there just wasn't the case. So you know,

374
00:17:17,840 --> 00:17:20,720
Speaker 2: when you're a portfolio operator in New Zealand's one piece

375
00:17:20,760 --> 00:17:24,359
Speaker 2: of your portfolio, and you know a lot of your

376
00:17:24,400 --> 00:17:27,119
Speaker 2: friends have already left, have become very difficult to justify

377
00:17:27,400 --> 00:17:30,440
Speaker 2: going again. Another challenge got can get as well. Okay,

378
00:17:30,440 --> 00:17:32,480
Speaker 2: they've spent a couple of billion dollars although the last

379
00:17:32,600 --> 00:17:35,840
Speaker 2: five years, well all that sort of doesn't it all

380
00:17:35,880 --> 00:17:39,160
Speaker 2: just look prove that the expiration band was it didn't

381
00:17:39,160 --> 00:17:39,879
Speaker 2: have much of an effect.

382
00:17:39,920 --> 00:17:42,080
Speaker 1: I was going to say exactly that to play devil's advocate.

383
00:17:42,160 --> 00:17:44,440
Speaker 1: Even if there wasn't that political decision made at that time,

384
00:17:44,560 --> 00:17:47,040
Speaker 1: they all came up dry anyway, Son.

385
00:17:47,240 --> 00:17:48,479
Speaker 3: There's a couple of schools of thought to that.

386
00:17:48,520 --> 00:17:51,040
Speaker 2: So the main owners are all those decisions well most

387
00:17:51,040 --> 00:17:53,040
Speaker 2: of them would have been taken before the band was introduced.

388
00:17:53,160 --> 00:17:55,200
Speaker 2: So it's such as such of the lead times involved

389
00:17:55,200 --> 00:17:57,680
Speaker 2: with making this stuff happen, that you can be looking

390
00:17:57,680 --> 00:17:59,840
Speaker 2: at four or five years to be able to go

391
00:18:00,000 --> 00:18:03,000
Speaker 2: I an investment decision. Remembering the IMV brought Shells assets

392
00:18:03,119 --> 00:18:05,240
Speaker 2: literally only a few days before the band was announced,

393
00:18:05,280 --> 00:18:06,960
Speaker 2: so they would have brought those assets where they plan

394
00:18:07,160 --> 00:18:09,800
Speaker 2: over the coming years to bring life into the likes

395
00:18:09,800 --> 00:18:12,439
Speaker 2: of Mao in poker and to bring more production into them.

396
00:18:13,080 --> 00:18:16,440
Speaker 2: So that investment did happen. The thing we're most worry

397
00:18:16,480 --> 00:18:19,879
Speaker 2: about now is not well, it's what happens next, you know,

398
00:18:19,960 --> 00:18:22,800
Speaker 2: where that capital cycle is now done. So we've seen

399
00:18:22,840 --> 00:18:25,320
Speaker 2: fifty wells go under the ground and we are literally,

400
00:18:25,359 --> 00:18:26,600
Speaker 2: we think, at a book end.

401
00:18:26,480 --> 00:18:28,639
Speaker 3: Of their capital cycle now. The latest one was.

402
00:18:28,640 --> 00:18:32,880
Speaker 2: A coupe well, which also came up essentially dry or

403
00:18:33,040 --> 00:18:37,080
Speaker 2: at least non commercial. What happens from here is deeply

404
00:18:37,240 --> 00:18:40,840
Speaker 2: uncertain because the investment that's required to stabilize, let alone

405
00:18:40,880 --> 00:18:45,240
Speaker 2: to increase gas supply is anything but firm or confirmed.

406
00:18:45,640 --> 00:18:47,960
Speaker 3: And those decisions that we be taken by.

407
00:18:49,840 --> 00:18:53,320
Speaker 2: Entities that you know, the visibility over on the base

408
00:18:53,440 --> 00:18:56,120
Speaker 2: on which those decisions will be made is very low,

409
00:18:56,680 --> 00:18:59,760
Speaker 2: and it requires investors from overseas to be able to

410
00:18:59,800 --> 00:19:03,399
Speaker 2: put capital into the country, and it's not certain that

411
00:19:03,440 --> 00:19:06,480
Speaker 2: will happen. That will take quite a The government, the

412
00:19:06,480 --> 00:19:08,120
Speaker 2: new government is said that they're going to do a

413
00:19:08,119 --> 00:19:12,119
Speaker 2: lot to reverse what has been done. I'd kind of

414
00:19:12,119 --> 00:19:15,000
Speaker 2: refer to that as being necessary but not sufficient to

415
00:19:15,040 --> 00:19:18,320
Speaker 2: be able to encourage these investors to go again.

416
00:19:19,600 --> 00:19:21,119
Speaker 3: But it's absolutely got to happen.

417
00:19:21,960 --> 00:19:25,600
Speaker 2: But yeah, the lack of success over the last few

418
00:19:25,680 --> 00:19:28,640
Speaker 2: years is a real hammer blow to the sector because

419
00:19:29,000 --> 00:19:31,399
Speaker 2: these most of those fifty wells where what you regard

420
00:19:31,440 --> 00:19:33,840
Speaker 2: as pretty low risk wells, and they just haven't come off.

421
00:19:34,480 --> 00:19:37,360
Speaker 1: There's a lot of complex interest in this industry I found,

422
00:19:37,400 --> 00:19:39,560
Speaker 1: at least through my research. For example, Genesis owns a

423
00:19:39,600 --> 00:19:42,240
Speaker 1: forty six percent steak in the coupe production field that

424
00:19:42,280 --> 00:19:44,960
Speaker 1: you've just spoken about. There, do we need someone independent?

425
00:19:45,080 --> 00:19:49,119
Speaker 1: Should these companies like Genesis contact spin off an independent

426
00:19:49,240 --> 00:19:52,600
Speaker 1: arm that then pays for and finds a solution for this.

427
00:19:55,240 --> 00:19:57,760
Speaker 2: You mean, completely recast the sector. I'm not sure I'll

428
00:19:57,800 --> 00:20:00,760
Speaker 2: go there right now. But what what does need to

429
00:20:00,760 --> 00:20:03,240
Speaker 2: happen I think is that there's we're at the stage

430
00:20:03,280 --> 00:20:07,840
Speaker 2: now where what we have is not working. So you know,

431
00:20:09,960 --> 00:20:11,919
Speaker 2: I think we need to think a little laterally around

432
00:20:11,920 --> 00:20:15,280
Speaker 2: what happens next. And perhaps our energy is part of

433
00:20:15,320 --> 00:20:17,240
Speaker 2: their thinking because the sort of thing you can turn

434
00:20:17,240 --> 00:20:20,480
Speaker 2: around very quickly, literally a nine to twelve months in

435
00:20:20,560 --> 00:20:23,320
Speaker 2: around for infrastructure of this type. It's the type of

436
00:20:23,320 --> 00:20:26,800
Speaker 2: infrastructure that the Europeans put in place when Ukraine did

437
00:20:26,800 --> 00:20:29,679
Speaker 2: what I did, when Russia bold into Ukraine and Russian

438
00:20:29,720 --> 00:20:32,560
Speaker 2: gas fell over these sorts. Facilities turned up very quickly

439
00:20:33,040 --> 00:20:36,040
Speaker 2: up in Europe and very on a very timey basis,

440
00:20:36,040 --> 00:20:38,679
Speaker 2: and there's a strong argument suggests that the presence of

441
00:20:38,680 --> 00:20:42,760
Speaker 2: those facilities went a long way towards insulating Europe from

442
00:20:42,880 --> 00:20:44,879
Speaker 2: the worst of what could have happened out of the

443
00:20:44,920 --> 00:20:47,720
Speaker 2: catarments of Russian gas. So I think you need to

444
00:20:47,920 --> 00:20:51,720
Speaker 2: know whether you recast the sector and talk about governance

445
00:20:51,800 --> 00:20:54,679
Speaker 2: arrangements or therm or CO. Has ben been mentioned in

446
00:20:54,720 --> 00:20:59,879
Speaker 2: the past, and there are strong arguments for that and

447
00:21:00,640 --> 00:21:02,160
Speaker 2: strong arrogance against as well.

448
00:21:02,720 --> 00:21:04,440
Speaker 3: But those are the discussions.

449
00:21:03,920 --> 00:21:06,840
Speaker 2: I think need to happen because the status quo is

450
00:21:07,920 --> 00:21:10,239
Speaker 2: I think proving right now. I've given the prices that

451
00:21:10,280 --> 00:21:12,560
Speaker 2: are being suffered by the sector. The status quo is

452
00:21:12,600 --> 00:21:14,480
Speaker 2: not working well.

453
00:21:14,640 --> 00:21:16,399
Speaker 1: I look forward to seeing what you come up with,

454
00:21:16,520 --> 00:21:18,359
Speaker 1: and let's keep talking, because I have no doubt that

455
00:21:18,440 --> 00:21:21,119
Speaker 1: this issue is not going away anytime soon. I very

456
00:21:21,200 --> 00:21:22,639
Speaker 1: much look forward to a solution. Thanks so much for

457
00:21:22,640 --> 00:21:24,240
Speaker 1: your time, John, I appreciate it pleasure.

458
00:21:24,240 --> 00:21:24,800
Speaker 3: Thanks Madison