Sunday, April 17, 2005

Energy: security of supply?

Today's Sunday Star-Times reports on an oil prospect "which could change the face of New Zealand's petroleum industry":

The Barque prospect, 70km off Oamaru, is believed to contain as much oil as found in all previous New Zealand discoveries and could have as much gas as in the original Maui and Kapuni gas fields combined - equal to 30 years of recent gas production.

They're drilling a well to confirm it, but if its even half the size they expect, Oamaru could become the New Plymouth of the south. But it won't necessarily mean the end of our current energy worries - as with other promising finds off the South Island, the gas is in the wrong place. There's simply no market for it in the South Island, and while one could be created, it would require a substantial capital investment - as would getting the gas to where the market is, in the North Island.

Fortunately, with Maui winding down, there may be someone willing to make that investment: Contact Energy. Contact is already looking at constructing an LNG terminal in New Plymouth to supply its existing gas-fired power plants - and it makes no difference to them whether the gas comes from Indonesia or Oamaru. A large find off the South Island would probably convince them to go ahead with the project - which means we could continue to build gas plants rather than having to resort to coal. Electricity prices would still rise - transporting gas as LNG adds a significant amount to the cost - but we wouldn't need to worry about security of supply for another few decades.


Or we could build power stations in Oamaru - we'd have to piss off a few farmers by building power lines up the S.Island to join up with the Cook Strait link.

Posted by Rich : 4/17/2005 06:31:00 PM

That would require a substantial upgrade in the Cook Strait Cable, which noone wants to pay for. More importantly, it would require a significant investment in undersea gas piping to get the gas to Oamaru. Once that's done, of course, the network could be extended around the South island (and I think this would be a good Thing anyway) - but its a massive cost.

When we started exploiting Maui, the government built the pipes to get the gas to market. But I don't think they'll really want to do that again...

Posted by Idiot/Savant : 4/17/2005 07:09:00 PM