As a
result of cheap Maui gas and plentiful hydro-electricity, over the past few
decades New Zealand has
enjoyed some of the cheapest energy of any OECD country. The situation is
changing; at best we are facing some radical changes in energy use, at worst we
are facing a crisis resulting from the following:

Cause 1: Maui gas will be exhausted by 2012. Distorted pricing and
supply contracts; resulted in Huntly Power Station, a coal mine mouth generator
running on 70 per cent Maui gas until very
recently!

Cause 2: Investment in new generating
capacity (and transmission) is woefully inadequate; as a result hydro lake
levels are being continually pushed to the limits.

Cause 3:
Distorted thinking is everywhere, for example; We will find more cheap gas'.
Gas is clean - coal is dirty'. Hot air - green alternatives such as wind
generation will save us'. No Nuclear'. The outcomes of the distorted thinking
will be price increases, then shortages (there is nothing like "black-outs" to
focus national thinking) and finally recession.

But
what can NZ do? - Mine Coal. Coal jump-started the industrial revolution, it can
provide the transition to post-gas and oil. NZ has the second highest reserves
of coal per capita in the world, yet we use less that any other country with
significant coal reserves. Our exports of our best coal have increased
threefold, yet out own consumption has remained static at about 1-1.5 Mtpa for
the last 30 years. Our coal is NZ owned and inexpensive relative to other energy
sources, even allowing for infrastructure and environmental costs.

What
can we do? We as mining professionals can promote informed responsible
development and investment in the country's mining and energy business. We can
galvanise public opinion on issues such as unbundling' our entire energy chain
from mine-to generator-through transmission, even if the nuclear issue has to
wait! With oil above US$70/bbl substitution is feasible. For individuals, there
is always solar!