Vancouver-headquartered Methanex Corporation has posted a statement on its website regarding the draft report, which Maui adjudicator Netherland Sewell and Associates International released to affected parties last week.
Methanex says the independent expert's draft determination of economically recoverable reserves is "significantly lower" than estimates prepared by its own consultants, Gaffney Cline.
"If the findings in the draft report are confirmed in the final determination, Methanex will lose substantially all of its remaining contractual natural gas entitlements from the Maui field," says Methanex president Pierre Choquette.
This will result in a "near-term" reduction in the current production capability of the New Zealand plants, unless additional gas can be contracted from other sources.
Commentators say this will mean the likely closure of the small (520,000-tonne capacity) Waitara Valley plant from late 2003, followed by the first of two methanol trains at the larger (almost 2 million-tonne capacity) Motunui complex in 2004-05.
Methanex Asia-Pacific vice-president Bruce Aitken told EnergyReview.Net in October that Methanex NZ had the capacity to operate as a swing producer, with total gas usage anything from 20PJ to 90PJ per annum, and it would make economic sense to do so for perhaps four or five years.
Choquette says the loss of a major portion of New Zealand production capacity, in a global market that is already well balanced, will likely lead to a tighter supply-demand balance for methanol and an extension of the period of strong prices in the short-term.
"If the findings of the draft report are confirmed, we will work with our long-term contractual customers in Asia-Pacific to minimize the impact of reduced production from our New Zealand plants.
"We believe that the impact in 2003 of a shortfall in production in New Zealand is manageable. We have a number of alternative global supply sources, including our plants in Chile and Kitimat (Canada), as well as the option of restarting one of our idled facilities in North America.
"We are also continuing to pursue additional gas from other sources in New Zealand," Choquette adds.
Aitken said in October that Gaffney Cline estimated substantially more gas was available in the Maui field. He declined to specify quantities, though industry commentators say up to 400PJ or more gas could be recoverable from parts of the Maui mining licence, including the Maui South or Ihi prospects.
Choquette says the Methanex submission to the independent expert will include the basis for this higher estimate.
Methanex is already taking steps to protect its Asia-Pacific markets. The Atlas facility in Trinidad, in which Methanex has a 63.1% interest, is scheduled for start-up in early 2004, adding 1 million tonnes to available global production capacity.
In addition, Methanex recently decided to proceed with an 840,000-tonne expansion in Chile that will be completed in early 2005.
Choquette said Methanex was also looking to the longer term, with last year's memorandum of understanding signing with the North West Shelf participants regarding Methanex possibly building an $A1 billion methanol plant in the Burrup Peninsula.
Methanex board approval for the WA project is expected next April. "That could be a major supply source for our Asian customer base," Choquette concluded.
Parties to the Maui gas contracts can comment on the NSAI draft report and Methanex is expected to file a submission. The final and binding NSAI report is expected to be released in early 2003.
