Study points to scale of opportunity for domestic natural gas to fill the gap
A new study on New Zealand's gas market shows massive electrification or alternative fuels will be required to meet residential and industrial demand over the next decade, even if LNG imports begin in 2028.
But Energy Resources Aotearoa says the findings raise an important question - what could more domestic natural gas deliver to help New Zealand avoid this outcome?
The 2026 Gas Supply and Demand Study, commissioned by the Gas Industry Company and prepared by PwC, looks at two futures.
In scenario one, New Zealand relies only on its existing gas fields. Gas production halves by 2035, demand must fall by 61 PJ - roughly the annual energy use of 1.8 million homes - with constrained gas-fired electricity generation and food producers and manufacturers facing forced switching.
This scenario confirms that in a future without LNG, natural gas remains the primary backstop for electricity generation.
With natural gas supply already tightening, choices have to be made. Without new sources of domestic gas coming online, business use of gas could be cut back in dry years to keep electricity flowing.
"The transition to electricity for food production, manufacturing, and petrochemicals - industries that employ thousands of Kiwis - cannot occur overnight." Energy Resources Aotearoa Chief Executive John Carnegie says.
In the second scenario, LNG arrives from 2028. Relative to scenario one, this keeps prices lower and more stable, supports manufacturing, food production, and investment in new renewables by moderating price spikes.
"LNG changes the trajectory meaningfully, and we support getting it here," Carnegie says.
"With modelled LNG, we would still need to see significant electrification or alternative fuels - as soon as 2027. More LNG supply than modelled could play a role in providing energy for industrials if economic."
The study flags the 2030s as a critical period, with major gas fields nearing end of life and domestic supply projected to fall to around 23 PJ by 2050. Even small delays to new gas supply from any source, LNG or domestic natural gas, increase near-term risk.
"This tells us gas is essential for energy security for the foreseeable future. But it also tells us supply is continuing to decline - this is the alarm bell our organisation has been ringing for some time." Carnegie says.
"This study is valuable because it shows what we're up against. LNG is part of the answer, and we support it.
But it also points to a gap that more domestic natural gas could potentially fill, with less complexity and exposure to global markets. That case hasn't been fully tested yet, and it deserves to be."