Story: Energy supply and use

Page 8. Natural gas

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New Zealand’s natural gas is a fossil fuel, often found with oil. It has been found in Taranaki inland and offshore – the huge Māui field is the most significant deposit.

Consumption and cost

In 1974, 21 petajoules of natural gas were used. (A petajoule is equivalent to the energy provided by around 28 million litres of regular unleaded petrol.) By 1984 use had increased to 89 petajoules. In 2007, 162 petajoules were used.

Most natural gas is used for industrial purposes. In 2007, 94% of natural gas was used for:

  • electricity generation – 59%
  • methanol and ammonia/urea production – 15%
  • commercial use – 3%
  • residential use 3%
  • unspecified uses – 20%.

In 2007 natural gas cost industrial users $6.30 per gigajoule, commercial users $16.10 per gigajoule, and residential users $35 per gigajoule.


Natural gas is transmitted at a higher pressure than coal gas, and was not able to be used in the existing gas reticulation system without considerable adjustment and the installation of new mains. New steel-walled pipes were welded, and X-rayed to ensure that there were no leaks. Natural gas is odourless and highly flammable – odour was added so leaks would be noticed.

Sticky problem

In the first three years of transmission up to 47% of natural gas was lost through leakage from the piping system. Coal gas has a high tar content, and had sealed damaged areas of pipe as it passed through them. Natural gas dried out these areas. The problem was solved by threading plastic piping through the existing metal pipes.

Industrial and domestic appliances that had used coal gas also had to be converted for use with natural gas. In the Hutt Valley and Porirua alone this meant adjusting 9,000 appliances.

Government and natural gas

Natural gas was managed and distributed by the Natural Gas Corporation (NGC), set up by the government in 1967. In 1978 NGC became part of the state-owned enterprise Petrocorp, which was privatised in 1987. The government deregulated the gas industry as a whole in 1992. Price controls and gas franchise areas (which had defined supply and distribution) were eliminated.

Transmission in 2007

In 2007 two transmission companies, Vector and Maui Development, used more than 3,400 kilometres of high-pressure pipelines to send natural gas throughout the North Island. From high-pressure pipelines, the gas went into 2,800 kilometres of intermediate- medium- and low-pressure pipelines which served local areas.

CNG and synthetic petrol

In the 1980s the government subsidised use of compressed natural gas (CNG), and built the Motunui synthetic petrol plant. It was seeking to use New Zealand’s abundant natural gas to reduce dependence on imported oil.

CNG can be used as a petrol substitute in cars. Once subsidies were removed in 1987, CNG use dropped significantly. The Motunui plant, one of the government’s ‘Think Big’ projects, opened in 1986. It converted natural gas to methanol and then to synthetic petrol. When oil prices fell, the plant switched and produced methanol for export. Production ceased in 2004 and the plant was mothballed.

How to cite this page:

Megan Cook, 'Energy supply and use - Natural gas', Te Ara - the Encyclopedia of New Zealand, (accessed 15 July 2024)

Story by Megan Cook, published 11 Mar 2010