Gasfield deal promises $860m boost to industry

ANDY JACKSON/ Fairfax NZ

PLENTY OF WORK: Mawai McDonald at work on the Ensign Rig 931 at Todd Energy's Mangahewa gasfield inland from Waitara. Todd's new gas supply agreement with Methanex New Zealand means up to 25 new wells will be drilled at the field over the next five years.

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New Zealand's energy industry has received an $860 million boost with confirmation yesterday of a gas supply agreement between petroleum company Todd Energy and methanol manufacturer Methanex New Zealand.

For Todd, the agreement would mean major development of its Mangahewa gasfield inland from Waitara, with up to 25 new wells being drilled over the next five years.

For Methanex, it would mean at least a doubling of methanol production at its Motunui site, as the 10-year gas supply agreement would allow it to restart a second production "train" there.

At present, the one train is producing up to 860,000 tonnes of methanol, and this would now ramp up to at least 1.5 million tonnes.

All of this is exported through Port Taranaki, so the extra production would be a major boost to its trade.

Todd Energy said the agreement would take effect and gas would start flowing in July.

Todd Corporation Group chief executive Jon Young said it would have significant economic benefits for New Zealand, and particularly Taranaki.

"It is estimated that the projects and their combined capital expenditure of up to $860 million will make a significant contribution to New Zealand's gross domestic product over a 10-year period," he said.

Independent studies also indicated that the combined projects would result in an increase in government revenue of up to $1.2 billion over the next decade.

Methanex president and chief executive Bruce Aitken said his company was delighted to announce the restart of the second plant in New Zealand.

"The quantity of gas supply under this contract potentially allows us to produce about 7.5 million tonnes of methanol over the next 10 years, representing multi-billion dollars of revenues," he said.

Methanex estimates the cost of the restart would be $100m, with a contractor workforce of up to 500 people required for the next six to seven months.

- © Fairfax NZ News