Texas-based Netherland Sewell and Associates International on Friday released copies of its final, and binding, report on remaining Maui reverses.
Its conclusions - that total original recoverable reserves were only ever 3562 Petajoules and only 370PJ of economic gas now remained - were worse than many in the industry had been expecting.
Commentators are now saying legal argument - whether in or outside the courtroom - over the methodology used by NSAI to reach its conclusions may be employed by some of the affected parties in pursuit of what they consider their fair entitlement to Maui gas.
This country's largest gas user, methanol manufacturer Methanex, says it and its advisors are currently studying the report and considering the various courses of action open to the Canadian corporation with respect to the redetermination process.
Methanex says it will lose substantially all of its remaining contractual natural gas entitlements from the Maui field, though NGC says Methanex has already consumed more than its fair share.
The revised reserves figure is to be reallocated to the three buyers - Methanex, NGC and Contact Energy - as if it had applied from the outset.
"This effectively means that Methanex will have used approximately 77PJ more than its redetermined entitlements to Maui gas. The implications, if any, of this overtake are a matter currently being considered," NGC says.
"As part of the redetermination, this amount has been allocated among the buyers from the Crown, with NGC's share of approximately 26PJ already included in its reduced entitlements."
For NGC, the redetermination represents a reduction of approximately 138PJ on the company's original allocation of 800PJ, with NGC's remaining entitlements being 112 PJ as at February 7, 2003.
NGC had previously reported an estimated reduction of 100 PJ, based on field owner Maui Development Ltd's November 2001 assessment of reserves (3800PJ).
This had largely been mitigated by NGC invoking the terms of the Gas Bank II contract last August, which meant Shell New Zealand "returned" to NGC, at no cost, entitlement to 78.9 PJ of prepaid Maui gas.
There is also provision in NGC's Maui purchase contract with the Crown that enables NGC to accelerate uptake of prepaid gas quantities in the final three delivery years. If prepaid gas cannot be delivered, there is provision for financial compensation to NGC.
Company chief executive Phil James says the extent of the negative impact of the NSAI report's conclusions on NGC is currently unclear, as it will depend on negotiations between MDL and the Crown on the future daily and annual delivery profiles for the remaining reserves. He hopes these negotiations will be completed quickly.
The decisions on future delivery profiles will also enable the company to reassess when it might exhaust its overall entitlements to Maui gas. NGC expects a delivery profile will extend to the original expiry date of 2009, but its entitlements to Maui gas may be exhausted as early as 2007.
James said NGC was already moving to develop further supply options, with last week's announcement of a $NZ7 million upgrade at its Kapuni gas treatment plant to restore full processing capacity and increase the amount of market specification gas by 30% from next October. NGC was also addressing other options to develop its natural gas portfolio.
Methanex is worst hit by the NSAI report, with production plunging from the usual 2.0-2.4 million tonnes per annum. It says it has sufficient contracted gas entitlements from all sources to produce a total of 800,000 tonnes of methanol this year, and believes acquisitions of additional gas could bump that figure to one million tonnes.
The NSAI redetermination of economically recoverable reserves also includes a total of approximately 55PJ of production from the currently untapped Maui A and D sands, which MDL says cannot be accessed from the existing Maui platform wells.
