The LNG decision

The NZ Energy blog has excellent analysis of this decision. They write:

To readers of this Substack this will come of no surprise and was expected. It’s not a good solution for New Zealanders but it is a necessary.

Necessary is the key point. We simply don’t have enough of our own energy for peak times. The less supply you have, the higher prices go.

For New Zealand’s industries to operate at full capacity, to protect the electricity system against dry year risk, to displace coal fired generation and to ensure reasonably priced domestic reticulated gas, we have typically needed a supply of about 200PJ annually. This translates to approximately 550TJ of daily production.

As of a couple of days ago the daily production had dropped to approximately 225TJ, or about half of what is historically needed to support NZ Inc’s economy.

A failure to act could have been disastrous.

I liken what we are experiencing to Germany if the Nordstream pipeline had been blown up slowly. German manufacturing capacity is now severely constrained, and the country is de-industrializing rapidly as they head into a third consecutive year of recession.

The Greens probably want us to go back to the 1200s, but I’d rather we don’t.

Importing LNG is a last-resort attempt to avoid being pushed over the apex of the Seneca Cliff by the energy-physics of production and the economy. It’s like jamming a finger in the dike to hold back the flood.

It will never compete with unconstrained pipeline gas. Too much energy is lost in liquefaction, shipping, and regasification. The EROI (Energy Return On energy Invested) is low, which means costs are high.

If we had acted years earlier we might be able to avoid the extra costs of importing LNG. But we didn’t, and so we do.

We can debate whether LNG is expensive. But the real question is: compared to what?

Compared to biogas? Too little, too long to scale if it even could.

Compared to electrification? Higher the energy costs, billions in capex and it has it’s own security of supply issues as a result of the dwindling gas supply.

Compared to doing nothing? Empty factories, lost exports, lights that don’t come on.

LNG won’t save us. But it will buy us time.

And right now, time is the one resource New Zealand can’t afford to run out of.

I’m pleased the Government has acted.

The post The LNG decision first appeared on Kiwiblog.