Gas
Energy Link’s new Gas Price Path report reflects the results of Energy Link’s detailed modelling of New Zealand’s gas market. The work is based on the new GMarket model of the gas market that incorporates the wide ranging uncertainties and development options facing the gas industry.
It also takes into account the expected market responses to future development scenarios.
Rather than simply projecting these uncertainties in a range of scenarios, Energy Link has modelled the dynamics of market participants’ decision making processes. It has drawn these elements together so that gas exploration trends and expected discoveries, and capital investments in gas and electricity infrastructure, are modelled consistently in response to gas prices.
The report itself is based on the results obtained from the GMarket used to generate 1,000 market scenarios, each of 20 years duration.
Key results included in the report include:
- The mean, median, and percentile range of gas prices on an annualised basis from 2006 through 2026.
- The mean, median, and percentile range of domestic reserves on an annualised basis from 2006 through 2026.
- The cumulative probability of an LNG import facility being built in any year from 2010 onwards.
Clearly there is a wide range of uncertainty when projecting as far out as twenty years. Despite that, investment decisions will be made in the next five years which will influence both the gas and electricity markets over that time. For this reason, Energy Link believes that such long term projections are not only valid, but also crucial to decision makers when considering their options in the short to medium term.