Gas accounts for approximately 20 per cent of New Zealand’s primary energy supply and nine per cent of total consumer energy demand in the nation’s residential and commercial sectors, according to the Gas Association of New Zealand.
This gas is produced from approximately 16 fields, located in the Taranaki region, whose potential was discovered over 100 years ago. Since 1995, more than 350 onshore and offshore exploration wells have been drilled in the Taranaki Basin and up to December 2008, a total
5,686 billion cubic feet (Bcf) of gas had been produced.
Production is currently dominated by the Pohokura and Maui fields with Shell and Todd Energy-owned subsidiaries controlling the majority of New Zealand production.
The giant Maui Gas Field, discovered in 1969, initially offered more gas than New Zealand needed for domestic use. However, the New Zealand Government has recently considered the viability of importing LNG should the country’s rich resources eventually fall short of demand.
The New Zealand Government has also promoted gas exploration and production with nine new permits for the offshore Taranaki Basin awarded in September last year. This trend has continued with further permits released earlier this year.
Come out, come out, wherever you are
Kapuni
The onshore Kapuni Gas Field, operated by Shell Todd Oil Service, is the country’s oldest producing gas-condensate field. Located in Taranaki, approximately
85 kilometres southeast of New Plymouth, the field contributes around 17.3 per cent toward the nation’s gas production, making it the country’s second largest field.
Discovered in 1959, gas from the Kapuni field had a carbon dioxide concentration of approximately 40 per cent, and therefore required special processing. Due to inadequate natural gas infrastructure at the time, it was not until 1967 that a gas market was established for Kapuni’s gas. The field was brought onstream in May 1970 with the commissioning of the Kapuni – Huntley Gas Pipeline.
Pohokura
Also located in the Taranaki Basin, the Pohokura Gas Field Development has powered up as production in Maui winds down. The project – a joint venture between Shell, Todd Energy and OMV New Zealand – will see the field supply
40 per cent of New Zealand’s natural gas production.
The development involved a single offshore platform plus three onshore development wells accessing the southern portion of the field. A further five wells have been drilled by a jack-up rig tied to the platform, approximately 8 km offshore, which tie into the onshore production station.
Motunui production
Construction of the production station situated at Motunui, near New Plymouth, began in 2005. The project also includes a gas export pipeline, which ties into the Maui Gas Pipeline, and a 34 km condensate pipeline to the Westgate Port at New Plymouth for export liquids. Natural gas from the field has been flowing since September 2006 and is being fed into the North Island gas network, with the condensate piped to storage tanks at Omata for shipping to refineries.
Kupe
The Kupe Gas Field is one of New Zealand’s largest undeveloped gas fields and is located 30 km offshore, south of the Taranaki Basin. The field contains proved and probable (2P) reserves of over 230 petajoules (PJ) of sales gas plus considerable condensate and LPG, with additional reserves potential.
Kupe is a joint venture project between Origin Energy as operator, Genesis Power, New Zealand Oil & Gas (NZOG) and Mitsui E&P Australia. The development involves an unmanned offshore platform constructed above the Kupe field production wells and a 30 km, 12 inch diameter subsea pipeline that will deliver the raw natural gas, LPG and condensate to shore.
At the end of April 2009, the Kupe project was over 90 per cent complete. All of the offshore facilities were in place, with attention shifting to the production station near Hawera and the condensate storage facilities near New Plymouth. The project is expected to be completed by the third quarter of 2009.
New ventures
Todd Energy plans to drill three new wells in an onshore Taranaki gas field, located 18 km southeast of New Plymouth over the next 18 months. Todd Energy Managing Director Richard Tweedie said that the Mangahewa Field could end up providing more than 1,000 PJ of gas reserves. The company said that New Zealand has enough 2P gas reserves to take it past 2022 at current demand levels, but a development like this could push the reserves out to 2030 or beyond.
Further north, L&M Petroleum has declared new potential in-ground gas resources of 1.2 trillion cubic feet (Tcf), including an estimated 780 PJ from one permit in South Waikato, near Auckland. L&M Chief Executive Officer Kent Anson said “The company plans an aggressive appraisal program over the next year in Southland and Otago where the company holds an estimated potential resource of 400 PJ of gas.”?
Gas – the golden generation
Meeting demand
New Zealand’s electricity usage is climbing at approximately 2-3 per cent per annum. This growth equates to around 120 megawatts (MW) of new generation required each year.
Genesis Energy has responded to this rising demand with its proposed gas-fired Rodney Power Station, to be located in Helensville. Should the station move to construction, it will have a capacity of 240 MW in its first stage and another 240 MW in its second stage.
The project will involve the construction of a combined-cycle gas turbine power station and associated facilities, including waste water treatment and disposal, gas reticulation, and a connection to the National Grid. The company said that land for the power station has been acquired, and current works include engineering design and specification with a preferred plant supplier.
Meanwhile, Methanex’s 900,000 tonne per annum (t/a) Motunui Methanol Plant was brought back online in October 2008 following its closure in December 2004. Shortly after, the company’s 530,000 t/a Waitara Valley Plant that had become operational to meet market demand was idled. Product from Methanex’s Taranaki facility is shipped to Asia Pacific markets.
Contact Energy’s peak performance
Also promoting a cleaner fuel alternative is Contact Energy with approximately half of the company’s total electricity production provided by natural gas-fired generation located in New Plymouth, Stratford, Waikato and Auckland.
Contact has an agreement with General Electric (GE) to purchase two 100 MW gas-fired peaking units to be installed on the site of the company’s former Stratford Power Station. The units are high efficiency LMS-100 gas turbine generators and will be the first of these units to be purchased and used in the Australasia region.
At full load, the two LMS-100 units will generate enough electricity to supply up to 200,000 homes, and have the ability to go from a cold start to full load in just 10 minutes, compared to conventional steam-powered gas plants. The plant is designed to help support increasing levels of wind generation during peak demand and periods of low wind or hydro generation, and is expected to be in service before the winter of 2010.
United Group has been contracted to project manage, engineer and install the two peaking units, and procure and install the balance of the plant required to complete the project.
Contact currently operates two other combined-cycle gas-fired power stations, the Otahuhu B 400 MW power station in Auckland and the 380 MW Stratford Plant, which was upgraded from 367 MW in 2008. Complementing this generation is the company’s small Te Rapa gas-fired cogeneration plant that has a capacity of 44 MW.
Store it where the sun don’t shine
Contact has also begun storing gas in its underground gas storage facility located in the depleted onshore Ahuroa Gas Field, in the onshore Taranaki Basin. The company said that the development and injection of gas will continue throughout 2009. When fully developed in 2010, the Ahuroa reservoir will be New Zealand’s first underground gas storage facility.
The Ahuroa project will store natural gas underground to help New Zealand at periods when it has access to lower-cost generation such as geothermal or hydro electricity. This will allow Contact to use its gas-fired power stations when market conditions justify, and provide the flexibility to have enough gas to operate both the Taranaki Power Station and the Stratford peaking plant. For more information turn to page 59.
Feeling connected
With over 3,400 km of high pressure gas pipeline, New Zealand’s transmission network comprises five major systems, including the Maui Gas Pipeline and Vector’s South, Central, North and Bay of Plenty subsystems.
The 307 km, 34 inch diameter, Maui pipeline is New Zealand’s largest capacity gas pipeline, extending from South Taranaki north to Huntley. Prior to October 2005, the pipeline was reserved for carrying gas from the Maui field, in accordance with the Maui gas contract. Since then, open access to the pipeline has been granted, enabling gas from a number of Taranaki fields under development, such as Pohokura and Kupe, to be transported to market.
In 1969, gas transmission pipelines were constructed by Natural Gas Corporation that linked Kapuni with the northern markets, comprising two separate subsystems; the North and Central. The 363.1 km Central Subsystem comprises the 14 inch diameter
Kapuni – Huntley Pipeline, which was built along a similar route to the Maui pipeline. The pipeline was lengthened to 373.7 km in 1986 to transport gas to Auckland and eventually to Whangarei and Kauri in the far north of the Island. The 14 inch diameter North Subsystem is owned by Natural Gas Corporation.
In 1984, the Huntley – Gisborne Pipeline was constructed serving demand on the west coast of the North Island. The pipeline and its laterals to Taupo, Tauranga and Rotorua comprise the Bay of Plenty subsystem, extending for 608.3 km.
In 2005, Vector secured approval from government authorities for a new loop pipeline from the Rotowaro Compressor Station near Huntley to East Tamaki in southern Auckland. The 89 km pipeline is designed to meet anticipated future loan in Auckland, which has recorded the fastest growing energy consumption rate in New Zealand.
A sound future for CSG
In September 2007, Macdonald Investments was awarded the first New Zealand mining permit for coal seam gas (CSG), for an area near Greymouth on the west coast of the South Island. The permit, PMP 50100, covers a 170 sq km onshore area, both north and south of the Grey River.
Since then, Macdonald Investments has entered into a joint venture with Chartwell Energy to develop the field, with the project to be managed by Kamenar and Associates. Once fully developed it is expected that the field will deliver enough gas to run a power station capable of supplying more than 50 MW to the national electricity grid for 20 years – enough energy to meet the needs of approximately 50,000 homes per annum.
Meanwhile, L&M Petroleum’s Western Southland Basin permits, PEP 38226 (Waiau) and PEP 38238 (Blackmount), which include the Takitimu North CSG fairway, are estimated to contain up to 300 PJ of gas.
The company has outlined development options such as on site power generation. Depending on further analysis of its fields’ potential, for a small to medium gas discovery of between 40 to 400 PJ, the company said that it would look into compressed natural gas for local markets to provide an alternative to importing LPG for South Island distributors. In addition, L&M is looking into the option of a mini LNG facility, which would also be an alternative to importing LPG.
For a large discovery of between 400 to 1,000 PJ, L&M said that it would look into direct reticulation for distributed cogeneration. Otherwise, the company would look into petrochemical production like ammonia and urea.
LNG: a liquid investment
With production from the Maui Gas Field expected to decline in 2009, the nation has been forced to consider a number of future potential energy options. The New Zealand Government has been looking into the viability of importing LNG from a range of suppliers, including Australia, to meet the country’s energy needs.
The Gasbridge Project has been proposed by Contact and Genesis, which would allow the option of importing 60 PJ/a of LNG – approximately half of New Zealand’s total gas requirements – if a shortage of domestic natural gas was to eventuate.
The proposed Port Taranaki LNG terminal in New Plymouth, would involve the construction of a new berth at the end of the main breakwater inside the Port of Taranaki, with LNG being piped and stored in a new tank in Contact’s New Plymouth Power Station. The LNG would be regasified and transported through the Maui pipeline.
New Zealand’s known remaining 2P gas reserves as at 1 January 2008 were 2,022.8 Bcf, which at the current rate of consumption represents reserves of approximately 13 years.
Promoting the future of gas
To further enable exploration and production of gas, the New Zealand Government has recently repealed restrictions on the building of large natural gas power stations to generate thermal powered electricity, overturning the 10-year ban on most new gas-fired base load power generation. Minister for Energy and Resources Gerry Brownlee said that the ban had discouraged gas and oil exploration in New Zealand as there were fewer outlets for gas sales.
It is evident that New Zealand’s gas exploration and production is not slowing down and with the move toward cleaner power generation, the development of underground storage facilities and improved infrastructure, the early stages of CSG development and investigation into LNG, the future of this rich resource is bright.