Swift Energy New Zealand (SENZ) will supply Genesis with up to eight Petajoules of gas over a three-year period, starting today.
The move means more flexibility for both companies in the rapidly strengthening New Zealand gas market and as the energy industry heads into the post-Maui age.
This new deal also means the suspension, for three years, of an earlier agreement announced in May 2001 between SENZ and Genesis for the delivery of up to 40PJ of gas over a 10-year period.
Under the new agreement gas from within Swift's exploration licence PEP 38719 and from the Rimu mining licence PMP 38151 will be used by Genesis at its 1000MW dual-fired power station at Huntly. The deal will actually involve some "gas swaps", however, as all gas in the nearby NGC high-pressure pipeline flows south to the Wanganui, Manawatu, Horowhenua, Wairarapa and Wellington regions.
Swift said that in addition to its existing production from the Tariki sands within the Rimu mining permit, production was expected to start later this month from the Kauri sands, with initial production from the Kauri-A4 well. The Kauri-A4 well was completed last October and successfully fracture stimulated last March. The company planned to complete the more recently drilled Kauri-E1 well to flow from the Kauri sands within the next few weeks.
Drilling of the Kauri-E2 well, also targeting the Kauri sands, was scheduled to start after that. The Kauri sands are found at depths of around 2880-3150m over much of south onshore Taranaki.
SENZ said it was also planning a fracture stimulation program late in the third quarter 2003 in an effort to boost flagging production from the Rimu-Kauri area. Swift Energy last year called in Core Laboratories to help it increase Rimu-Kauri production, with Core Labs concluding that water-based drilling and completion fluids had caused significant formation damage in the Tariki sandstones surrounding already drilled well bores in the Rimu-Kauri area.
Company president Terry Swift said the second agreement with Genesis was a positive step in Swift Energy's developing role in the New Zealand gas market. "We continue to believe that our recent successes in New Zealand can play an important role in helping to fulfill the natural gas needs for the country as well as create value for the company's stakeholders."
Genesis chief executive Murray Jackson said the new contract was significant as it further secured the competitive positioning of New Zealand's largest thermal station. "The contract with Swift will result in greater flexibility and greater volumes of gas over our previous contract and is an important addition to Genesis' fuel portfolio in the coming years. Huntly will continue to have the versatility of using either gas or coal, and this new contract with Swift will help to offset reduced gas volumes following the redetermination of Maui reserves."
