Doubt Maui upgrade will produce more gas

The giant offshore Taranaki Maui gas field is expected to keep producing past 2020, but industry sources say it would be surprising if that meant more gas will come on to the market.

A $60 million upgrade is expected to extend the life of New Zealand's largest gas field beyond 2020, according to industry sources in Taranaki, though the field's operator declined to comment.

Maui has remaining reserves of about 300 petajoules of gas, but there is uncertainty about how much will be recovered at the late stages of the field's life.

A petajoule is equivalent to the electricity used annually by a city of about 40,000 people, about the size of Porirua.

Cheap Maui gas has dominated the market since the 1970s, but is on a long-term decline. In the past Maui had been expected to be near its end-life by now.

Contact Energy and Vector have contracted to buy gas from the Maui field owners till 2014. Anything above the contracted amounts could be sold to new buyers, but Contact said it would have first right of refusal on new gas.

"We don't know if there would be more gas coming out of the field," a Contact spokesman said.

The longer field life is expected because of the fairly common practice to "work over" wells, but may not mean much more gas one source said. A longer field life at Maui would free up more gas from other fields, but is unlikely to change the picture on whether there was enough extra gas available to build a new power station, for example.

Industry players such as Todd Energy have recently said they believed New Zealand had enough known reserves to last beyond 2030, and it is considering building its own gas-fired station in Taranaki at a cost of $250 million.

New Zealand needs many years of gas reserves to make a new gas-fired power station viable.

Contact Energy has tested the market for a supply of 20 years of gas at a decent price, but could not get anything past 2017. Other sources suggest a power station would be viable with 10 to 15 years supply of gas lined up.

With more gas from other fields such as Pohokura and Kupe, the expected shortfall in gas supplies is expected five years later than the picture even two years ago. The country has "OK" supplies till 2016 to 2020.

- © Fairfax NZ News