“The decision to close the Waitara Valley plant took some in the industry by surprise and leaves Maui offtakes at the minimum required to keep the field operational,” one Methanex worker told EnergyReview.net on condition of anonymity.
“It also sends the message that Methanex won’t be mucked around regarding gas supplies.”
He added that some industry players did not seem to want to help Methanex stay in New Zealand. Methanex used to be the country’s sixth largest exporter, earning up to NZ$600 million a year in foreign exchange and contributing about NZ$200 million a year into the national economy, NZ$40 million of which was spent directly in the Taranaki region.
Methanex last Friday said it was closing its Waitara Valley methanol plant near New Plymouth, less than a year after mothballing the nearby bigger Motunui complex, but with the option of retaining the smaller plant as a swing producer should it secure more reasonably priced gas.
However, a downstream executive said there was nothing sinister in the valley plant closing suddenly.
“The supply contract for Maui gas expired on September 30 and Methanex simply decided it was not economic to continue running the plant on just non-Maui gas,” he said.
Bridge Petroleum and Westech Energy had supplied gas to the valley from their Radnor-1 well from early this year but that had been at most only about 3PJ and was watering out. Even the further Radnor wells scheduled to be drilled from next year, and any other gas from such smaller fields as Supplejack, might not be sufficient for Methanex to restart the valley plant as it needed about 16PJ or so of gas to run economically.
While Maui offtakes were now likely to be near the minimum required to maintain field flows, Maui operator Shell Todd Oil Services would have planned for such an event and would take some processing capacity at the onshore Oaonui production station offline if necessary.
That situation could continue until 2007 – with NGC and Contact as the two remaining Maui gas customers – or 2009 if the Ihi prospect was successfully encountered during this summer’s scheduled drilling programme from the A platform, the downstream executive added.
The exact minimum Maui flow rates are not known and Shell Todd Oil Services could not be contacted for comment today. Maui used to produce up to about 180-200PJ per annum but now flows at about half that rate or less.
