But both firms are tight-lipped over rumours that Port Taranaki is the front-runner, ahead of Marsden Point and the Firth of Thames, to be selected for the project should Genesis and Contact decide to proceed with LNG importation later this decade.
Contact corporate development manager Frank Geoghegan told the 2005 New Zealand Oil & Gas Expo in the New Plymouth yesterday that the two companies were hoping to have a site chosen before the end of the year.
But Genesis fuel development manager Allan Melhuish said once that site had been chosen, the companies’ preference was to do nothing but sit on the site for as long as possible in the hope that explorers make enough gas discoveries, and be able to bring that gas onstream quickly enough to avoid having to import LNG.
Geoghagan said the companies still believed LNG importation – of 50-60PJ per year of gas priced at NZ$6.50-7.50 per GJ – would be economic and would not threaten the viability of the local exploration industry.
However, several commentators, including energy analyst Chris Stone, have said they believe LNG is more likely to be priced at NZ$8-9 per GJ and could seriously damage the local gas exploration industry, locking New Zealand into long-term fixed price contracts.
Geoghegan said the partners needed to choose a preferred site soon as consenting issues could take two years and construction of the likely NZ$600 million regasification plant could take another four years. That would mean no LNG imports, before 2011 – by which time a supply-demand gas gap would be looming large.
“That's why we need to start thinking about this now.
“We prefer domestic gas to LNG, but we would also prefer LNG to nothing at all and the lights going out. We believe LNG is very practical and feasible,” said Geoghegan.
But he conceded any LNG project could become “the biggest white elephant since the Motunui”, referring to the NZ$2 billion 1980s Think Big synthetic fuels project at Motunui in Taranaki that ended up losing the government and minority partner Mobil about NZ$750,000 per day in the late 1980s and early 1990s when world oil prices were low.
Contact and Genesis confirmed a potential site for the construction of an LNG receiving terminal had been decided but said confidential negotiations with affected parties had not yet been concluded.
