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Speaker 1: Supplies of natural gas will not meet demand over the

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Speaker 1: next three years. That's what the guys from MB said yesterday.

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Speaker 1: This is going to put pressure on gas prices and

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Speaker 1: also raise further questions of how to secure supply without

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Speaker 1: reducing or even stopping operations. Our supply has been in

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Speaker 1: decline since twenty nineteen, many would argue even longer than that.

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Speaker 1: Last year, the amount in our natural reserves decreased by

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Speaker 1: twenty percent because we've been using a lot. Director and

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Speaker 1: head of research at Analytica, John Kidd joins me.

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Speaker 2: Now, Hello, John fand and Andrew.

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Speaker 1: It's not a new problem, is it.

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Speaker 2: Your problem has been coming forward, as you say, for

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Speaker 2: quite a few years now, and much really what we've

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Speaker 2: seen over last two years in particular, it's just a

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Speaker 2: farely dramatic acceleration of what's been a trend now for

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Speaker 2: the last five or six years.

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Speaker 1: So we're using gas like water, but we're not finding

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Speaker 1: any new gas to use.

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Speaker 2: No, we're not using gas like water. Actually, the gas

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Speaker 2: market isn't quite dramatic contraction, so you know, it's probably

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Speaker 2: an obvious thing to say, but we don't have the

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Speaker 2: ability to trade gas and out of new Zealand. It's

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Speaker 2: actually unique for a developed world. So when supply is

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Speaker 2: our demand has to meet that. So the gase market

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Speaker 2: has been shrinking for as you say, the last five

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Speaker 2: or six years, and that's just a function of the

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Speaker 2: physical reality of our market. We don't have the ability

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Speaker 2: to top up gas because it just doesn't come into

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Speaker 2: the system, so we're just drinking.

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Speaker 1: Is the problem that we've not been looking for new

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Speaker 1: supplies of gas, or that they might not be supplies

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Speaker 1: at all out there.

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Speaker 2: It's definitely not a problem of not looking for new

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Speaker 2: supplies of gas. We've had five years now that pretty

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Speaker 2: much that same time period where there's been a period

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Speaker 2: of a very heavy investment activity insective. It's been something

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Speaker 2: like two billion dollars invested over the last five years,

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Speaker 2: fifty odd production wells which have been drilled, and unfortunately,

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Speaker 2: there's just been a very broad and very deep success

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Speaker 2: across that activity and we are where we are. I mean,

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Speaker 2: it's not what the set they had expected that those

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Speaker 2: work programs were very well, they're considered to be relatively

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Speaker 2: low risk, and they were expected to deliver a lot

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Speaker 2: of gas system and that just seridain happened and that's

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Speaker 2: the nature of the business.

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Speaker 1: John, Are you telling me that gas exploration did not

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Speaker 1: stop during the labor government?

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Speaker 2: What I'm probably saying is that the time horizons that

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Speaker 2: are involved with a sector are so long that most

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Speaker 2: of the work that I've just spoken about was scheduled

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Speaker 2: before the ban had come in. So I guess the

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Speaker 2: most concerning part for us now is what happens next.

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Speaker 2: Because the work that has gone into the secretary of

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Speaker 2: the last five of these parties and so had been

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Speaker 2: well signaled and had been planned for years. We're now

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Speaker 2: into a next generation really where all of the regulatory

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Speaker 2: change that has come in on the last two terms

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Speaker 2: of government, new investors and there aren't many have been

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Speaker 2: left frankly or existing investors now need to think about

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Speaker 2: what they do next. Do we go again? Is there

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Speaker 2: another two billion in the key to go again? And

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Speaker 2: I would suspect that the answer might be very difficult

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Speaker 2: to be. It's a very difficult investment proposition for those

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Speaker 2: companies to deal with.

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Speaker 1: Do we have to start preparing for a life without gas?

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Speaker 2: No? There will always be guess for the uses that

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Speaker 2: we are typically used to, So for the mums and

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Speaker 2: dads at home, industrial and commercial users, although they are

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Speaker 2: facing their own pressure industrial commercial users, there will be

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Speaker 2: gas available for those users. Where the pain is coming

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Speaker 2: from right now and has been for the last few years,

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Speaker 2: has been into the very large end of town, So methnecks,

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Speaker 2: they are the ones that are feeling the greatest pain

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Speaker 2: out of the whole situation and power generation, so those

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Speaker 2: users have had to curtail the rest of the market.

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Speaker 2: There will, i'd suggest, always be enough Guess to certainly

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Speaker 2: service those at home.

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Speaker 1: So we're looking for alternative sources of power other than gas.

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Speaker 1: Would that be a better way to actually sustain the

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Speaker 1: demand that comes from the beginning of town.

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Speaker 2: So I think that's you know that beg end of

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Speaker 2: the town doesn't have an option. Frankly, their process is

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Speaker 2: exclusive to Guess and if they don't have gas, then

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Speaker 2: they can't process. So that's actually quite a big problem

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Speaker 2: for ended Ink Because I mentioned Methnics before, they're a

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Speaker 2: billion dollar exporter. They when they're running at high capacity

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Speaker 2: and billiy Nolan's be sports out of the Taraonaki region

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Speaker 2: that's none now just a fraction of that because they

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Speaker 2: can't produce to what they would normally or what they did,

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Speaker 2: the gas market was full. For those that are sort

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Speaker 2: of further down the chain, you know, the transition is

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Speaker 2: real and everybody is focused towards getting away from fossil fuels,

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Speaker 2: but that's not something that can happen instantly or in

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Speaker 2: many cases even slowly. There needs to be fuel available

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Speaker 2: to be able to bridge between now and whether it's

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Speaker 2: twenty fifty, all beyond or before. We need a bridge

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Speaker 2: to be able to do that, and gas is the

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Speaker 2: ideal fuel for that.

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Speaker 1: John, thank you, Brandon brand Inside and I thank you

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Speaker 1: so much John as the director and hit of research

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Speaker 1: at Analytic or a private company that does deep dives

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Speaker 1: and research into gas and energy expiration. And this is

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Speaker 1: a big problem. For more from the Mic Asking Breakfast.

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