1. Overview

TIMES-NZ demand sectors (such as industrial or residential) and transformation sectors (such as electricity generation) will demand natural gas or oil products as an input fuel. The parameters, efficiencies, and potential alternative fuels are clarified in those modules of the model and are out of scope for this document. The supply module clarifies:

1. The quantity of available fuel for each future year, where relevant,

2. The projected costs of producing those fuels

3. The relevant emissions associated with extraction. This includes the fugitive emissions associated with natural gas extraction or domestic oil production, and excludes the combustion emissions, which are calculated on the demand side. Domestic and imported natural gas are the most critical to the energy sector at the time of writing, and these receive the most attention to ensure the final model accurately reflects New Zealand’s energy sector. However, this module covers supply availability and cost projections for all oil and gas products, including:

• Domestic natural gas availability and cost projections

  • This includes delivery costs to specific sectors

• Domestic LPG availability and cost projections

• Domestic crude oil availability. Note that we assume all indigenous crude oil products are exported

• Imported oil products cost projections, including:

  • Diesel

  • Petrol

  • Fuel oil

  • Aviation fuel

  • LPG

  • Imported natural gas (LNG) availability and cost projections.

• Fugitive emission factors associated with the production of natural gas Note that TIMES-NZ does not currently consider non-energy use of oil products, including lubricants, parrafin wax, or bitumen. For the most part, these products are imported and do not compete with energy oil products. Conversely, we do consider non-energy use of natural gas and coal in the industrial sector.

1.1. Scenario adjustments

TIMES-NZ 3.0 adjusts natural gas supply across the two scenarios, as the future of natural gas was considered a key uncertainty by many of our stakeholders[1].

The Steady scenario includes LNG import options, reflecting greater willingness to invest in gas market support infrastructure. Domestic natural gas supply itself is based on the latest MBIE 2P production profiles.

In the Shift scenario, LNG import options are disabled in the current build. However, a Shift-specific LNG configuration is still retained in the source inputs so it can be re-enabled later if required. Domestic natural gas supply is likewise limited to the proven and probable (2P) reserves as of January 2025.

Neither scenario includes additional natural gas supply from as-yet undiscovered fields. No other oil product parameters are adjusted across the scenarios. Notably, we assume global oil prices and our ability to import oil products remain the same in both scenarios. There is potential to adjust these for future sensitivity testing.

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[1]

This stakeholder consultation pre-dated the Government’s recent announcement to begin a procurement process for an LNG facility: Securing New Zealand’s energy future. At the present time, we propose that the two scenarios will continue to reflect different potential outcomes of this process.