The Government has approved the first two investments from its $200 million Gas Security Fund, lending up to $23.5 million to Todd Energy for a pair of drilling projects in Taranaki that ministers say could unlock close to 20 petajoules of gas over the next five to nine years.
Resources Minister Shane Jones and Associate Finance Minister Chris Bishop announced the decisions on Monday morning, two months out from the general election on 7 November. Both projects go to Todd Energy, which the ministers describe as a New Zealand-owned explorer and producer operating in Taranaki, and both are structured as time-limited loans with money from Todd alongside the Crown contribution rather than as straight grants.
The larger of the two is the McKee Gas Cap project, which will receive a loan of up to $16.2 million to drill and connect a new gas well, with Todd Energy contributing almost $7 million. The second is the McKee-Tariki Production Well project, which will receive up to $7.3 million towards converting an existing well so it can reach gas in the deeper Tariki reservoir, with Todd putting in about $3.1 million. If the drilling works as hoped, both are expected to have gas on stream by the end of 2027.
“Together, these first investments from the $200 million Gas Security Fund could unlock up to 19.9 petajoules of additional gas reserves over five to nine years to maintain our energy supply as we transition to renewables,” Jones said.
“These two projects, if successful, are expected to provide around four petajoules per year at peak production. That’s equivalent to around 6 percent of New Zealand’s 2027 expected gas production.”
That comparison is a fair guide to how thin domestic supply has become. Annual petroleum reserves data published by the Ministry of Business, Innovation and Employment in May showed proven plus probable gas reserves had fallen 23 percent in a year to 731 petajoules as at 1 January 2026, the lowest level since records began 20 years ago. Newswire covered that release at the time.
“New Zealand’s 2P reserves decreased by 217 PJ, of this 108 PJ was gas produced over the year, and 109 PJ reflected downward revisions to existing estimates,” MBIE domains manager Amapola Generosa said in May. “The largest 2P change was at the Pohokura field, which reported a 129 PJ decrease partly linked to the underperformance of a well.”
The same data set showed operators expected to produce 85 petajoules of gas in 2026, 15 percent below the profile they had submitted a year earlier. Set against that, four petajoules a year at peak is a useful addition rather than a fix. The shortage is already reshaping industry. Methanex said last week it will shut its Taranaki methanol plant in early 2027 because it cannot secure enough gas to keep running.
Bishop framed the loans as a way of getting private money moving. “Together, in the first year alone, these projects are expected to deliver the equivalent energy needed to power more than 80,000 New Zealand households for a year,” he said.
“Importantly, both projects involve significant co-investment from Todd Energy, ensuring the inherent risk associated with bringing new gas to market is shared. We’re using public funding to de-risk new gas well drilling and spark significant private sector investment for ongoing public benefit.”
The fund itself has changed shape more than once. It was set aside in Budget 2025 for co-investment in new gas field developments, which can take up to a decade to bring on. In November last year the ministers widened the scope so it could also back extra drilling in existing fields, production facility upgrades, appraisal work and gas storage.
“As our gas reserves dwindle, a growing gap is emerging in our energy system, driving up electricity prices for households and threatening the viability of gas-dependent industrial and commercial businesses,” Jones said at the time.
Expressions of interest opened on 12 January. The ministers say 17 proposals have been submitted since then and more funding announcements are expected soon. The fund is administered by Kānoa, the regional economic development and investment unit inside MBIE, with investment decisions made jointly by the Resources Minister and the Associate Finance Minister on advice from an independent Gas Advisory Panel. On these two loans, that leaves roughly $176.5 million of the $200 million still unallocated.
Whether the rest of it is ever spent on gas is now an election question. Labour’s SolarSaver package, announced in July at $160 million over four years, would be paid for by repurposing the gas security fund, according to 1News. The Green Party’s Kiwipower policy, released later the same month, was reported on the same basis. Both parties want the money in renewable generation, batteries and household solar instead of wells.
That gives the timing of Monday’s announcement some weight. Loans already approved and contracted are harder for a new government to claw back than money sitting unallocated in a fund, and the ministers have signalled further decisions before the campaign ends. Parliament rises on 24 September and is dissolved on 1 October, with voting opening on 26 October and election day on Saturday 7 November.
Energy is shaping up as one of the sharper dividing lines of this campaign, alongside the cost of electricity for households and what happens to gas-dependent employers in Taranaki and the Waikato. If you are still working out where the parties stand, our voting tool lets you compare their positions side by side before you cast a vote.
What do you make of putting public money into new gas wells while the country is trying to shift to renewables? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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