The South Island gas industry

Press, 25 February 1977, Page 12

The South Island gas industry

The lack of a comprehensive national energy plan is seriously impeding the making of sound decisions on a number of questions of local as well as national importance. One of these questions is what is to be done about the remaining undertakings in South Island towns and cities which supply gas to homes and industries. Struggling under the twin liabilities of outmoded gas-making methods and expensive, imported feedstocks, these undertakings survive today only because the Government subsidises them. The Government is clearly thinking hard whether it is worth while to continue to pay these subsidies.

The fate of the gas industry in the North Island is not in doubt because undertakings there are being supplied with either natural gas or liquefied feedstock from the Kapuni gasfield. When the Maui field comes into production, North Island gas suppliers will be able to serve many more consumers. South Island suppliers do not yet know’ whether they will ever be in a position to distribute gas derived in one form or another from the North Island’s resources.

Continuing to prop up the South Island suppliers would make sense only if. in the not too distant future, they can look forward to a new and economical source of gas. A new deal for the distributors might mean direct delivery’ of liquid petroleum gas to their consumers. If neither the gas pipelines nor the appliances at present in use in South Island towns and cities will be needed under any sensible scheme to make the best use of all the country’s resources of energy, it would make sense to wind down the South Island gas industry as swiftly and as painlessly as possible. If any hope can be held out for discovering handy sources of gas for South Islanders, or for the economical conveyance of North Island gas. the Government and the gas undertakings should try’ to sustain the industry in the meantime.

The Minister of Energy Resources (Mr Holland) was only being sensible when he said that the Government should not be expected to supply every person in the community with the same range of alternative sources of energy. Nevertheless, South Island consumers would be justifiably vexed if their bills for energy turn out to be higher than North Island bills. Some fair balance of advantages and disadvantages of local resources must be sought even if the uneven distribution of resources cannot be entirely discounted. Supplying gas to South Island consumers may make better economic sense in the long run than being deterred by the high immediate costs of getting the gas or feedstock to the South Island. At least South Islanders will want to be assured that the gas is being put to the best use in the North. Using gas to generate electricity may prove to be more wasteful of the country’s energy resources and less economic in the long run than distributing it as a premium fuel throughout the country. If gas is used extensively as a premium fuel, the peak demand for electricity will be lower, and the capital costs of installing generating capacity correspondingly lower. The many related decisions on energy depend, in part, on some informed guesswmrk. including estimates of the chances of finding new sources of feedstock for the gas suppliers. One thing, however, appears to be certain: the revival of a coal gas industry is uneconomical and, indeed, impracticable; this kind of plant is disappearing in all parts of the world. When speaking recently about the future of the gas industry in the South Island, Mr Holland expressed his disappointment that the Government had been unable to produce an over-all energy policy. But he and his officers are best placed to contrive such a policy and to facilitate a sensible decision on the South Island gas industry.