Barrett said the outlook and options now facing Contact, an NZSX-listed Origin subsidiary, were brighter than two years ago when New Zealand faced the risk of looming gas supply shortages.
Since 2003 Contact has done a lot of work, in conjunction with fellow industry player Genesis Energy, on the feasibility of importing LNG or CNG. It has also developed its own upstream interests and assessed the likelihood of further gas finds by the buoyant domestic exploration industry.
“Our geothermal and gas-fired stations continue to represent the best opportunity for future additional capacity and will continue to play an important, critical role,” Barrett said.
But Contact also had other options, including right of first refusal for some additional Maui gas, and greater flexibility, including extra gas from the smaller onshore Swift Energy-operated Rimu and Kauri fields. So any final decision on LNG or CNG importation could still be a couple of years away.
Maui partners Shell NZ, Todd Energy and OMV last year agreed that more gas – primarily in the Kapuni D sands within the northern Maui A lobe and from the Ihi prospect – could be extracted at the same price as specified under the existing Maui contract. Though details have yet to be finalised, EnergyReview.net believes up to 90 petajoules of gas could be extracted from Ihi and a similar amount from the “AD” sands.
Despite a more confident gas supply outlook, Barrett would not say when Contact would proceed with its already-consented 380MW Otahuhu-C station in Auckland.
Contact was examining how to optimise the plant configuration to best complement the other generation investments that were occurring.
Contact – which has aligned its financial year with that of Origin Energy – said its nine-month earnings before interest, depreciation and amortisation (EBITDA) were NZ$363.5 million, 14% above the NZ$318.3 million for the corresponding previous period, with an effective tax rate of 33% (compared to 40%).
Barrett said the “solid” results reflected a consolidation of the company's retail electricity position in an environment where tariff levels were increasing to reflect the tightening supply-demand balance.
While Contact had increased its number of electricity customers, to a total of 513,000, it continued to lose gas customers, down 2000 to 85,000.
Wholesale electricity market conditions were relatively tight this year as hydro-lake storage levels were lower than last year, which meant higher average wholesale prices (up 38% to NZ$54.72 per MWh) and more gas purchased (up 18% to 42.5PJ).
Barrett said retail electricity price increases had averaged about 6% per annum, reflecting the tightening balance of demand and supply, and the underlying cost increases being faced by electricity generators, including higher transmission and regulatory costs.
“In the emerging post-Maui energy environment, all new generation options – wind, hydro, geothermal or gas-fired – come at a higher cost than options available in the past,” he said.
Wholesale gas sales to external customers increased by 54% to 5.1PJ, while internal gas usage was 21% higher at 31.1 PJ. Wholesale gas revenue increased by 47.8% to NZ$24.1 million; retail gas revenue rose by 11.4% to NZ$92.6 million; and gas purchase and transmission costs were 18% higher, at NZ$190.4 million.
Contact declared a fully imputed final dividend of NZ10c per share, taking total fully imputed distributions to NZ18c/s. Barrett said Contact’s policy was to maintain or grow dividends while targeting an average net surplus payout of about 80%.
Barrett declined to comment on rumours that Port Taranaki, not Marsden Point, was now the preferred site for any LNG regasification plant.
