Late last week representatives from Shell New Zealand, Contact Energy and independent consultants were among those who spoke at the Utilicon conference in Auckland, addressing the implications of last month's comments by Royal Dutch Shell executives that a probable tripling in New Zealand gas prices would be necessary "post Maui".

Shell International's East Asia-Australasia regional business director Tim Warren told delegates at the 2002 New Zealand Petroleum Conference, held in Auckland in late February, that the New Zealand industry was at a crucial watershed of change.

There was likely to be threefold increase in the price of natural gas in the future, as the Maui field ran out, in perhaps five years, and exploration moved into deeper water or more frontier basins. The New Zealand industry would definitely be facing higher gas prices, perhaps as much as the "global norm" of $US3 per Gigajoule from the present wellhead cost of under $US1, added Warren.

There was likely to be threefold increase in the price of natural gas in the future, as the Maui field ran out, in perhaps five years, and exploration moved into deeper water or more frontier basins. The New Zealand industry would definitely be facing higher gas prices, perhaps as much as the "global norm" of $US3 per Gigajoule from the present wellhead cost of under $US1, added Warren.

Some petroleum conference delegates disputed Warren's prediction, however, saying the average Australian gas price was about $US1.40 and $US1.25 in Britain, while others said Warren's prediction of $US3 "just happened" to roughly equate to the exported price of LNG from Western Australia's Northwest Shelf, where Shell is a major player.

Warren's widely reported remarks had smaller gas users wondering if there would enough economically priced gas left post-Maui to supply the New Zealand commercial and domestic markets.

However, Utilicon delegates were told of the complex New Zealand gas scene, where the producer price of Maui gas is about $NZ1.50 per unit. This country's biggest gas user Methanex buys Maui gas from the Crown at the producer price plus the 45c Energy Resources Levy. However, Methanex does not pay any margin to the government. Whereas both of the other big Maui gas users, Natural Gas Corporation and Contact Energy, pay both the ERL and a Government margin, taking their wholesale gas price to about $NZ2.65.

Shell NZ commercial manager Peter Hazledine told Utilicon delegates that a 300% increase in the wholesale cost of gas would not equate to a tripling of retail costs. Contract Strategies managing director John Bay said a tripling of the producer gas price, to about $NZ5.00 per unit would equate to only a 20% or so increase in the retail reticulated gas price.