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Taranaki politicians, business leaders and the oil and gas industry have reacted with disappointment to Methanex NZ’s decision to shut down the Waitara Valley methanol plant.
The Vancouver-based company announced Wednesday that it is preparing to lay off staff at Taranaki after failing to secure enough gas supplies to keep the plant running.
In an emailed statement, Methanex said it would keep Waitara Valley in safe condition and restart it if gas was available.
Some activities in the Waitara Valley, such as truck loading, would continue to supply the local market.
The executive director of the Taranaki Chamber of Commerce, Arun Chaudhari, said the loss of jobs was sad for the workers and their families, and also for the company, which was facing difficult times.
“It’s not something we haven’t seen before, as both Motonui and Waitara Valley have been eliminated before,” he said.
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Chaudhari said that now less offshore exploration was planned, there was not the same confidence that the plant would resume production.
Redundancy packages should help cushion the immediate effects of job losses, he said.
Taranaki-based contractors who rely on Methanex to work during maintenance shutdowns will be the hardest hit, he said.
“There will be further job losses as the company restructures, adding to rising unemployment in Taranaki.”
While its two methanol production plants in Motunui will continue to operate, Methanex has begun an organizational review to reflect lower production and is consulting with staff.
The company employs 275 people at the Motonui, Waitara Valley and Port Taranaki sites.
Permanent job losses are expected as well as a reduced need for contractors to support ongoing maintenance activities, the statement said.
New Plymouth Mayor Neil Holdom said the decision by one of the region’s top employers was “really disappointing” and would have a “massive impact on workers.”
“It was inevitable given that our government seems determined to end the oil and gas industry in New Zealand as soon as possible with increased use of coal which will likely largely offset the shortfall in energy demand in the short and medium term, “he said in a statement.
“This is a reminder that Aotearoa’s transition to a lower emissions economy will be felt much more severely in Taranaki, and the Government and our Prime Minister must fulfill their commitment to support our region through multi-year investments to help our people and economy with a just transition in the next 10 to 20 years.
Venture Taranaki CEO Justine Gilliland said the decision would not have been made lightly.
“It highlights the importance of certainty of supply and future plans, given the crucial role that natural gas can and should play in a just transition to a low-emission future,” it said in a statement.
New Zealand Petroleum Exploration and Production Association Executive Director John Carnegie said Methanex’s decision reinforced the importance of a long-term supply of natural gas to the national economy and export industries.
“It is concerning that several other major regional industries in New Zealand are also considering their future,” he said.
Methanol production from the three Taranaki plants accounted for three percent of the global methanol market, and the company represents 10 percent of Taranaki’s economy, employing and supporting hundreds of employees and contractors.
New Plymouth MP Glen Bennett said he expected the shutdown to be “a short-term problem.”
“This is a business decision made by Methanex,” it said in an emailed statement.
“I understand that it has to do with gas availability in 2021, as there has been a decrease in production from the Pohokura field, as well as Covid-19, which has caused some delays in new drilling by gas producers. “.
Methanex NZ Managing Director Dean Richardson said it was a disappointing result “as we expect methanol demand to pick up and grow as global economic activity picks up.”
“The growth is due to methanol being a key component used to produce countless everyday consumer and industrial products and the global recognition that methanol provides environmental benefits as a fuel.”
Richardson said natural gas remains the cleanest viable feedstock for producing methanol on a commercial scale.
“New Zealand’s lost production is likely to be replaced by methanol made from coal, generating significantly higher emissions, which means higher global CO2 emissions and jobs lost at Taranaki.
“Methanex is a major natural gas buyer in New Zealand and we supply the gas and electricity markets with consistent long-term demand.
“This, in turn, gives suppliers the confidence to seek and develop natural gas reserves that supply other parts of the economy, such as smaller industries, commercial users, residential consumers and electricity generators.”
Richardson said gas would be needed in New Zealand to maintain energy security until other practical solutions are available.
Demand for methanol is expected to grow as global economic activity recovers, he said.
