LNG (LIQUIFIED NATURAL GAS)

LNG, coal tipped for NZ energy replacement

LNG and "clean" carbon-taxed coal are the most likely energy replacements later this decade for a...

All nine speakers at the "New Zealand Energy to 2013" meeting talked about this country's looming energy crisis, though they differed on the timing and severity of the supply shortfall, precipitated by the dwindling Maui gas field.

NGC's wholesale gas manager Jim Seymour said gas demand could outstrip supply as early as 2005, even with only one of three Methanex methanol trains operating.

He also said he was worried by the apparent dominance of Maui and Pohokura partners Shell, Todd Energy and OMV Petroleum with their "extensive cross-field linkages" and their 77% ownership of this country's yet-to-be developed gas reserves, which could mean little genuine competition and higher than necessary future gas prices.

Seymour, Contact Energy's Frank Geoghegan and others said that LNG was a distinct possibility later this decade to help meet any energy supply shortfall. However, Solid Energy marketing director Andy Matheson said coal was New Zealand's most plentiful energy resource and, with modern technology and a mid-range carbon tax, would be commercially attractive at a price of about $NZ4.00-4.50 per GJ.

Yesterday Contact chief executive Steve Barrett confirmed his company had already started investigations into the potential use of LNG or coal and, with a mid-range carbon tax (about $NZ12 per tonne), both looked equally attractive and at least one of them would be needed before the end of the decade.

Taranaki is seen as the obvious place to receive LPG imports as it is the centre of this country's energy industry and the existing infrastructure. However, major capital expenditure would be needed: deepening the harbour at Port Taranaki to enable LNG carriers to visit and the construction of storage and pipeline facilities.

The Wednesday night engineer's meeting also proved to be another forum for the continued debate about New Zealand gas prices and economics.

Methanex technical manager Dennis Addison said Methanex was so keen to get gas for next year and beyond that would enter into contracts at the pre-drill stage of suitable exploration programs.

As well, Methanex modelling showed Pohokura gas at Maui prices would generate excellent returns on investment for Shell, Todd and OMV.

Shell EP commercial manager Peter Hazledine retorted that his company's modelling showed Methanex was well able to pay more than the $NZ16.5 Maui wellhead price. Although Royal Dutch Shell was suspending all New Zealand EP activity, it wanted Methanex to stay in this country. "We need them and hope they will not become a casualty or a fatality."

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A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

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