Underground gas storage site gets nod

New Zealand's first underground gas storage facility can now be fully commissioned.

The facility is the old Ahuroa gasfield, east of Stratford, which electricity generator Contact Energy is developing into a giant reservoir, three kilometres underground, to store gas until it is needed.

Daily, Contact has been pumping hundreds of thousands of cubic metres of Taranaki gas into the field under a special licence designed to test the functionality of the project.

But now the consortium that owns the field, Australian-based Origin Energy and 51.4 per cent Origin-owned Contact, has been granted government permission to fully commission the project.

Granting of the 40-year permit was announced late last week by Energy and Resources Minister Gerry Brownlee.

The permit under the Crown Minerals Act will allow the Ahuroa Gas Storage Project to be developed into an underground gas storage facility for the purposes of storing and supplying gas for electricity generation, said Mr Brownlee.

"This is an exciting development, which illustrates the growing maturity of the New Zealand gas market," he said.

"Not only will this be the first commercial underground gas storage operation in New Zealand, but this project will allow Contact to better manage the use and supply of gas during peak period and low periods."

The Ahuroa gas storage facility will also supply Contact's $250 million, 200 megawatt gas-fired peaking power station now being constructed virtually above the old gasfield.

Both the storage facility and the peaking plant will play important roles in ensuring security of electricity supply and better management of that supply during dry years.

Contact says the second stage of construction at Ahuroa is under way now, and the company expects to be able to extract gas within weeks. At this stage Contact will be able to withdraw sufficient gas from the facility to supply the two fast-start gas turbine peaking units at Stratford. Eventually, the facility could extract up to 2.5 million cubic metres of the gas a day if needed.

While this underground gas storage project is a first for New Zealand, it is common overseas.

It was pioneered 95 years ago in Canada when a depleted gas well was restored into a storage field.

There are now dozens of such storage facilities. The common form of underground storage uses depleted gas reservoirs such as Ahuroa, which began its life as part of the Tawn (Tariki, Ahuroa, Waihapa and Ngaere) cluster of gas and oilfields that fed the Waihapa production station east of Stratford.

Two years ago, Origin Energy bought the Tawn assets from United States company, Swift Energy.

As part of the deal, Contact paid $54m for the right to own and operate Ahuroa as the underground storage facility and to buy the remaining gas and LPG reserves in the Ahuroa reservoir.

Then, Contact said this would enable it to use its gas-fired power stations as and when required.

It will also enable Contact to store gas at times when it is cheaper and easier to rely on other power generation methods, such as its hydro and geothermal power stations.

Taranaki Daily News