A few years ago nearly every major production station, processing plant or tank farm was under-utilised, with the "old guard" of Shell New Zealand, Todd Energy and Fletcher Challenge Energy wondering how to spark life into a somewhat sleepy energy sector.

Now further discoveries, fresh players and this country's looming energy crisis - the faltering offshore Maui field - have combined to transform the industry into a vibrant sector.

NGC's announcement last Thursday that it plans to recommission one of three process trains and expand LPG storage at Kapuni is confirmation of the bright future the industry now faces.

NGC chief executive Phil James said that bringing the third process train back into operation would return the Kapuni plant to full capacity and increase its current capacity to produce retail market specification gas by about 30%.

The extra 100 tonnes of LPG storage - necessary to treat the extra LPG produced by the third train - would give an improved storage buffer for an expanding LPG market.

NGC's expects the upgrade project to be completed by October.

James said the upgrade would also enhance the strategic nature of the plant to process new gas discoveries which may require carbon dioxide removal before delivery into the market.

As well, Kapuni is likely to play a greater role in meeting New Zealand's energy needs in a post-Maui era. Field owners Shell and Todd Energy plan to drill two wells, both of which have the potential to add substantial recoverable reserves, in different parts of the field this year. Shell and Todd market 50% of Kapuni gas, with NGC marketing the other 50%.

Kapuni gas has a high (45%) CO2 content which is removed to meet market specifications. However, since 1986 most Kapuni gas has gone to the Methanex New Zealand Motunui and Waitara Valley methanol plants as CO2-rich feedstock in the methanol manufacturing process.

Gas liquids, in the form of LPG and natural gasoline, are extracted from the raw gas during the treatment process and the upgrade will allow more of these valuable products to be extracted.

Industry commentators say increased amounts of Kapuni, McKee and Mangahewa gas could keep the small valley plant going from 2004 for several years without any new gas, such as Pohokura.

The Methanex entitlement to Maui gas may effectively end late this year if adjudicator Netherland Sewell and Associates International confirms reduced Maui reserves. The NSAI final report is due to be with the Maui parties within the next two weeks.