New Zealand is an energy-rich country with electricity and natural gas the key components of its energy profile. For most people and businesses, access to energy is taken for granted. These expectations have been conditioned by several decades during which they have been satisfied in full (with some notable exceptions). But, behind the delivery of energy services lie decades of very large capital investment in generation, transmission and distribution of electricity, and in the discovery, development, production and distribution of gas. Electricity and gas supplies are now inextricably linked. About a quarter of New Zealand’s electricity is produced from gas, with gas-fired power stations taking about 40% of natural gas production. Gas is the preferred fuel for new generating plant. However, gas supplies to the electricity industry will be tight and major gas users will have to consider alternatives. Options for enhancing our energy supplies need to be examined and strategies for action agreed. The paper that follows seeks to describe the issues likely to influence industry strategy in the near term. We examine New Zealand’s energy profile, the factors determining primary fuels supply, the options for managing supply risk, and then draw together conclusions as to the likely factors that will determine future outcomes.
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