While welcoming Genesis Energy’s decision to proceed with its e3p station at Huntly - “we are pleased to see e3p moving ahead from a national security of supply perspective” - Contact was still worried about the implications of the government underwriting the project, said Barrett.
“We continue to have concerns about any government actions that could be interpreted as intervention. Hopefully the government will continue to be strong in their commitment that this was a one-off event,” he told EnergyReview.Net in Wellington recently.
Genesis in August announced the go-ahead of its NZ$520 million combined cycle Huntly power station project, with the government agreeing to share an unspecified amount of risk with Genesis around the long-term supply of gas. Energy Minister Pete Hodgson said then that a worst case scenario could mean the government being called on to help service project debt.
Barrett also welcomed last month’s Bridge Petroleum-Westech Energy Radnor gas find in central Taranaki, even though that gas is destined for methanol manufacturer Methanex. “Any developments that bring additional gas upstream are important for New Zealand.”
However, even with Contact’s share of Pohokura gas, it needed more before it could proceed with its planned Otahuhu C power station in Auckland.
“There is still a need for longer term gas as our present supply arrangements are only adequate for our existing base-loaded combined cycle stations - Otahuhu B and TCC at Stratford.
“Gas supply will continue to be tight in New Zealand for at least the next few years, with continued economic growth ... we need to have increased confidence in future gas supplies before committing to any new projects.
“Our preference is for indigenous gas, though we will still have to fully assess the potential of LNG. It is theoretically possible it could be the end of the decade before a decision is made on Otahuhu C, although I would like to see that within the next two years or so.”
Barrett, who recently agreed to stay at the helm of now Origin Energy-controlled Contact for another year, said he would like to see urgent action regarding carbon charges and changes to the Resource Management Act.
“The government, as soon as possible, should provide some guidance regarding carbon charges. This has been a constant theme for us for over a year now as it will affect nearly everything.”
Energy Minister Pete Hodgson told ERN that carbon tax levels would be set once Russia ratified the Kyoto Protocol, though they were likely to 8-10 Euros per tonne of carbon dioxide emissions. “However, I can understand that Steve wants more certainty than that.”
