For some time now there have been rumours circulating the New Zealand energy industry that Pohokura may prove to be only two-thirds the size of the current estimated 900 billion cubic feet of gas and 50 million barrels of condensate.

If present appraisal drilling - the Pohokura-3 well to the north of the 80 sqkm field and Pohokura South-0I - confirms this reduction, it will have major implications not only for future gas users, but also for the final scale of the Pohokura development.

At present the Pohokura partners - Shell New Zealand, Todd Energy and Preussag Energie - are pressing ahead with resource consents for a full-blown $NZ900 million development. Reduced recoverable reserves figures would mean a scaled-back or at least staged project.

The fight for Pohokura gas would also intensify, with thermal electricity generators possibly outbidding against methanol producer Methanex for the rights to the majority of the gas.

One Pohokura problem, said an industry commentator, was the "tight gas" aspect of the producing Kapuni group formation, which meant uncertainty about the amount of recoverable hydrocarbons from parts of the 16km-long and 5km-wide field off the Motunui coast.

The tight (or deep) gas would mean wells would have to be positioned over "sweet spots" (areas of high permeability), with the resulting rapid drawdown of gas affecting the ultimate recovery factor.

Another commentator said he had always thought a proven and probable reserves figure of 600-650 bcf was more likely for the low-relief anticline, than 900 bcf or 1tcf touted in industry circles earlier this year.

Shell New Zealand chairman Lloyd Taylor has declined to comment on the rumours, though he admits the Pohokura partners need to have more confidence and less uncertainty in bookable figures before deciding on the exact details of the proposed development phase. "Hence the need for more appraisal wells," he said from Wellington.

However, he denied reduced reserves figures would affect the overall economic viability of the Pohokura project,. "There is absolutely no threat to the project. We wouldn't be spending upwards of $NZ60 million on currently drilling two appraisal wells if we didn't think the development was a goer."

In 2000 Taylor told the New Zealand Petroleum Conference in Christchurch that the break-even point for Pohokura was then believed to be about 200 bcf of gas.

Operator Shell Todd Oil Services has since said it expects Pohokura to last 10-20 years, with production rates ranging from about 70-120 bcf per annum.

Meanwhile, industry commentators say there is a new sense of realism in the Methanex camp regarding the gas price it will have to pay to remain operating in New Zealand in a post-Maui age.

"Methanex wants to stay for as long as possible in New Zealand and is recognising it will have to pay a reasonable price for non-Maui gas," said one commentator.

Another said he believed Methanex could pay up to $US1.35 per Gigajoule, which would equate to about $NZ2.50-2.70, for its gas compared to the present $US1 per GJ.

However, Methanex Asia-Pacific vice-president Bruce Aitken is remaining tightlipped about gas prices, citing commercial sensitivities. "Simple economics suggests that the likely imbalance between gas supply and demand in the coming years will lead to increased gas prices.

"However, as a company that sells a product on international markets we need to be very conscious of maintaining our international competitiveness.

"Our future in NZ is totally dependent on gas availability and the long term competitiveness of our plants," he said from Auckland.