Maui gas policy wrong, coal merchants say

Press, 1 September 1980, Page 5

Maui gas policy wrong, coal merchants say

PA Wellington Coal merchants have tried to convince the Minister of Energy (Mr Birch), that piping natural gas throughout the North Island to capture big industrial markets will prove to be an irreversible error in energy planning. A deputation from the North Island-based Coal Merchants’ Federation presented Mr Birch with what it considered were two contentious issues:

— The deliberate marketing of natural gas to convert big industrial coal users, a move that contravenes assurances given by Mr Birch;

— The piping of natural gas to areas which are marginal energy users which could equally be serviced by coal. The federation’s president (Mr M. Jeromson)

said both policies were “irresponsible.” • ,

The federation was convinced that NeW Zealand did not have the gas reserves to support widespread reticulation. Mr Jeromson said he told Mr Birch that in 1977 recoverable ret ources had gas at 6030 petajoules and coal at 26,200 petajoules. In 1979 gas had dropped to 5890 petajoules, while coal had increased dramatically to 93,000 petajoules. The current estimated measured reserves of coal stood at 117,000 petajoules, successful energy exploration logically widening these margins. “It is the economic factors that are forcing the exploitation of Maui gas. at the expense of soundly based long-term energy planning,” Mr Jeromson said.

The federations’ submis-

sions to Mr Birch referred to the immediate cash flow required to cover the charges on the huge capital outlay to bring gas ashore, the monetary implications of the “take or pay” commitment negotiated between the Government and the oil companies, and the rapidly spiralling costs of import .oil and the corresponding urgency to use gas condensate.

Mr Jeromson said the subsequent requirement to dispose of the remaining dry gas was the main factor dictating its illogical intrusion into markets best served by coal.

“The use of gas competing with coal as an industrial fuel must be resisted. This would have the effect of releasing a further 18 to 22 per cent of the Maui gas reserve for future transport fuels.”