Gas Association Forum speech

Thank you for the invitation to join you this evening for your annual gas forum.

I would also like to acknowledge the presence of Lady Joan Gillies, who has had a close relationship with the gas industry for many years.  As patron of the Kennedy Educational Scholarship Trust your contribution has been beneficial to the development of the industry.

It is a great pleasure for me to be here in your association's centenary year and I would like to start by congratulating you on reaching your 100^th birthday.

It is not a bad achievement for a hundred year old to have made gas a major energy source in New Zealand, especially over the past 30 years.

Gas continues to be a central part of our energy supply mix. For example, last year gas provided 21 percent of the country's primary energy supply and a quarter of the country's electricity generation was sourced from gas.

This makes gas the second largest component of New Zealand's primary energy supply after oil. It is also the second largest type of energy use for electricity generation, behind hydro.

And I'm sure there's plenty more gas in the old belly!

Growing up in Hong Kong where gas has been used as an energy source since the late 19^th century, where gas is a convenient and affordable energy option for household heating and cooking.

 Hence my passion for the growth of gas use in New Zealand and appreciation of its importance to consumers and to the economy.

Gas is also a useful fuel for water, space and process heating in the commercial and industrial sectors. It can be attractive to businesses as it does not contribute to air pollution.

The National-led government believes that gas has an important part to play in New Zealand's energy environment and part of my role as Associate Minister of Energy and Resources is to support and encourage the continued growth of the gas industry.

It is important that you as industry leaders are the ones to take your industry forward. The government wants to work with you in partnership in the regulatory environment and to support you in developing and growing gas use.

One issue that some of you have discussed with me in the past is about raising the profile of the direct use of gas and the data shows that it has gone down - with residential gas demand declining 41 percent between 2000 and 2008.

This is a challenge that needs to be addressed and planned for and I agree that is important and I am looking forward to supporting you in making this happen.

I believe in direct use of gas, but I also believe in choice and hence the consumers should be offered choices, which comes down to price, distribution channels and promotion.

The opportunity and challenge is there for the gas industry to promote to their customers the savings and other advantages that can come with efficient gas use - which in turn will grow and develop the industry.

There is information indicating that a combination of gas and solar power for heating can be the most cost efficient and environmentally friendly option.

I am sure Mike Underhill from the Energy Efficiency and Conservation Authority will have more to say on this subject later in the evening.

Many of you here this evening have been waiting for an update on where things are at with gas safety regulations

and I am pleased to tell you that yesterday I took a paper to the Economic Growth and Infrastructure Cabinet Committee on the electricity and gas safety regulations.

Subject to Cabinet approval, which should come shortly, the exposure draft of the gas safety regulations will be available for consultation next month with implementation taking place towards the end of the year.

Thank you for your patience over the last 10 years, from now on I will do my best to ensure the political and regulatory process can be harnessed to be as efficient as possible.

Once released, the draft regulations will be your final opportunity to review and consider the technical accuracy of the regulations and your chance to ensure that the regulations are workable for you and your industry.

The review will not be a re-litigation of the work and decisions that have taken place over the last three years. 

Given the importance and many uses of gas in New Zealand, it is important that we get this right.

As I mentioned earlier, gas is the second largest component of New Zealand's primary energy supply and the second most prevalent energy being used for electricity generation.

It is critical that the gas sector is able to grow and develop because - as the marginal source of electricity generation - the price of gas largely determines the price of electricity.

Given its importance, there is a need to discover and bring on-stream new gas production to ensure that prices remain competitive and New Zealand's future energy demands are met.

New Zealand's geological basins are largely unexplored and there is a significant possibility of more gas being found in future.

There is some belief that New Zealand's gas supply is running out but we know that we are reasonably secure for the short to medium term and according to current projections, New Zealand has enough gas to meet forecast demand through the next decade.

The effect of future gas finds on New Zealand energy use is difficult to forecast and will depend on the size of the discoveries and on their location. While small discoveries may sustain supplies to current users; very large finds may prompt export initiatives.

The good news is that the Minister of Energy, Hon Gerry Brownlee,  is committed to exploring this potential.

This year Government has provided funding of $7.9 million for seismic studies and has committed a further $20 million through 2010 and 2011.  We have also announced the rollover of the tax exemption for non-resident offshore rig operators and seismic vessels until 2014.

This shows our continued commitment to gas exploration.

But because it is still unknown whether we will find gas, it is important that we use gas as efficiently as possible - as with all energy resources.

Improved energy efficiency means better productivity or greater energy savings and for businesses this can have the added benefit of improving their environmental credentials.

There are many opportunities to improve the energy efficiency of natural gas use in households and businesses, including the use of efficient gas appliances such as instant gas water heaters and condensing boilers. 

Gas is relatively efficient in terms of greenhouse gas emissions, which is a huge plus in using gas for space or water heating in the home.

Less direct measures like insulation - such as the government's Heat Smart: programme - and double glazing will also help improve consumers' efficient use of gas.

Recently, concerns have been raised again about the safety of LPG cabinet heaters with Dunedin Coroner calling for Energy Safety to undertake a review of the safety of cabinet heaters.

Energy Safety is co-ordinating a review of LPG cabinet heaters which will take into account a range of economic, social, health, safety and environmental issues for New Zealanders.

In the meantime the relevant government agencies will work together and seek industry input on the issue.

Terms of reference are being developed and they will address the suitability of LPG Cabinet Heaters for use in New Zealand.

Thank you again for inviting me to your forum this evening, I am looking forward to having an interactive, open and robust working relationship with the industry.

I assure you that issues you raise will be listened to with an open mind, solutions will be derived with a participative approach and I understand that time is of the essence.

Ours is a relationship that I believe will develop and grow like the gas industry.

Thank You.