LPG production to make comeback

New Zealand looks set to again become self-sufficient in LPG, thanks to a series of initiatives taking place in Taranaki.

If it happens, LPG prices may fall because New Zealand would not need to pay the shipping costs of importing the gas from Australia.

At present the country imports up to half its liquefied petroleum gas, a situation that is a far cry from 15 years ago when at the height of gas production from the Maui field, 177,000 tonnes of LPG was exported through Port Taranaki each year.

That also resulted in low-priced LPG for Kiwi consumers. But New Zealand is forced to be part of an international LPG market in which prices are based on a Saudi-based contract.

But now the situation is poised to reverse again, thanks to projects involving several energy fields in the region.

The Kupe gasfield, now being developed off the South Taranaki coast, will this year begin producing up to 90,000 tonnes of LPG.

Todd Energy has filed resource consent applications with the Taranaki Regional Council and New Plymouth District Council to construct an LPG extraction plant at its McKee/Mangahewa field, east of Waitara.

At least some of the gas stream from the big Pohokura field off the North Taranaki coast may have its LPG extracted as part of the Todd initiative.

LPG Association president Albert de Geest confirmed from Wellington yesterday that at present New Zealand has to import half the 170,000 tonnes of LPG it consumes each year.

But that will almost instantly change this year when the Kupe field begins feeding gas ashore at Ohawe. LPG extraction and storage facilities have been built at the Kupe onshore production station, from where the gas will be trucked to retail customers - and potentially to tankers berthed at Port Taranaki.

The regional council confirmed yesterday it has received a resource consent application from Todd Energy for construction of a large LPG plant next to the McKee production station on Otaraoa Rd. The application says this plant would extract 27,000 tonnes of the LPG from gas from the McKee and Mangahewa fields, and its share of gas from the Pohokura field.

The application adds that the company hoped to begin earthworks last month. But yesterday Todd spokeswoman Cressida Gates said no decision had yet been made to proceed with the project.

There are also strong rumours circulating in Taranaki that the other members of the Pohokura joint venture - Shell and OMV - are also investigating extracting LPG from its share of the gas. However, Shell spokeswoman Jackie Maitland said the commercial viability of such a project was constantly under review and that no decisions had been made.

At a conference in Christchurch late last year, Mr de Geest forecast that if New Zealand again became self-sufficient in LPG, price would fall by more than 20 per cent relative to oil and other petrochemical products.

This would be because prices would fall to "export parity", which would be the price of LPG in Australia, less the cost of shipping.

- © Fairfax NZ News