This year's methanol production has been slashed by almost 60%, to only one million tonnes or so, because of the devastating Independent Expert's report on remaining Maui reserves, which found Methanex had already used almost all its entitlements to Maui gas.
However, the company is already working on a number of confidential initiatives to keep at least one of three methanol trains operating to, hopefully, 2006, using about 20 Petajoules or more of gas a year.
"It's easy to look at today's situation and be very negative," Asia-Pacific senior vice-president Bruce Aitken told EnergyReview.Net in Auckland before leaving for a two-week overseas business trip.
"Our immediate plan for the next two to three years is to have some level of sustainable production from Taranaki. At present we only have a small amount of contracted gas for 2004, but I am hopeful we will be able to continue operating at least at present levels.
"We are going to try to hang in there for as long as we can," said Aitken, who is known as an optimist.
Methanex was working on a number of initiatives, but he declined to specify what those might be. "Things are quite sensitive right now. However, another month or so should produce good news on both fronts," he added, referring to New Zealand and the corporation's plans for its Burrup Peninsula, Western Australia, project.
He declined to comment further on New Zealand, other than saying industry commentators were wrong when they recently speculated Methanex could pay up to $NZ7-8 per Gigajoule for new gas.
There are few avenues open for Methanex as New Zealand has little uncommitted gas and most recent discoveries have been small onshore finds. However, Methanex could cobble together enough gas to keep at least one train operational by renewing its exclusive contracts for off-spec McKee and Mangahewa gas, by continuing to use some CO2-rich Kapuni gas, and by buying higher-priced gas from gas traders, particularly electricity generators with dual-fuel capabilities.
"Sure we would love to renew those (McKee and Mangahewa) contracts as we presently have exclusive offtake for off-spec gas and two or three more onshore discoveries would be very interesting for Methanex for the next two to three years."
Aitken also said Methanex had produced its own analysis of Taranaki's exploration prospectivity.
"There will be some people who rubbish our 'creaming curve', but others who find validity in our analysis. Our theory is that when you find gas in a producing basin you will also find several others of similar size. So we believe there is a big field out there still to be discovered; and all it would take would be one well."
Aitken believed several wells could be drilled off Taranaki next summer, not only follow-up wells to the Tui oil discovery, but perhaps more in the Maui mining licence or in the two nearby blocks held by Shell New Zealand, Todd Energy and OMV.
He urged New Zealand explorers to consider future gas supply contracts linked to world methanol prices.
"We do this everywhere, in Chile, Trinidad and our Australian contract with the North West Shelf partners links the gas price to methanol prices. We believe this linkage offers a reasonable balance of risk and reward for buyers and sellers.
However, it appears to be somewhat foreign in New Zealand, although the concept has been agreed to before, though not implemented."
Aitken also reiterated his belief that electricity generators could always outbid Methanex for long-term supply contracts of Pohokura gas and that the 500-600 bcf field off north Taranaki might not be in production until late 2006.
