NATURAL GAS FOR N.I. CITIES

Press, Volume CIV, Issue 30827, 12 August 1965, Page 1

NATURAL GAS FOR N.I. CITIES

Consultants Recommend Building Pipeline

(From Our Parliamentary Reporter >

WELLINGTON, August 11.

The formation of a company to construct a £6.5 million pipeline to carry Kapuni natural gas for domestic and industrial consumption to nine North Island cities and boroughs is recommended by the Government’s adviser on the utilisation of the gas.

In a report tabled in Parliament today, Zinder International. Ltd., of Washington, advocated supply of the gas to companies in Auckland. Hamilton, New Plymouth, Hawera, Wanganui, Palmerston North, Levin, the Hutt Valley and Wellington.

It suggested the gas should not be used for electricity generation and estimates the benefits of using it in the form of gas could he between £245 million and £3OO million.

The company said it believed the market for the gas would be evenly divided between homes and commercial and industrial establishments, and on this basis of demand placed the life of proved and possible reserves at 30 to 35 years.

The availability of these markets mean, according to the report, that gas companies would not need to enter into competition with large quantity suppliers of coal and heavy oil. Conditions In recommending the con-' struction of a pipeline, the company lists conditions i which it feels must apply to such developments. These I are:— (1) That the gas will be sold at prices competitive with electricity and light fuel oils, but not at prices low enough to compete with heavy fuel oils and coal. (2) Sales efforts on behalf of the use of gas will be intensified and gas reticulation will be extended both into areas already built up and into new areas as they are developed. (3) Agreements for the sale, transportation and purchase of the gas on reasonable terms can be reached by the owners of the gas. the gas undertakings and a pipeline establishment. (4) The gas undertakings will be willing and able to finance the necessary conversion of consumers' appliances, the rehabilitation of their reticulation systems and the extension of these systems. (5) The pipeline establishment will be tax free and have the use of Government credit for construction. (6) Government credit and assistance in limited

amounts will be provided to

the gas undertakings in order to keep the interest on their new debt at the lowest possible rate and to help meet the expenditure connected with conversion to natural gas service. Public Favour The report said the prices jat which the gas would need to be sold would be considerably lower than the present : tariffs from coal gas. The company found a larger potential number of gas consumers than it contemplated when making its first report to the Government in August last year. Dealing with the effect of the gas supply on the nine gas companies concerned, the report said it was estimated they would need to spend about £1.5 million in converting their systems and consumers’ appliances to natural gas service. “Connexions between the pipelines and the reticulation systems, and feeder mains to reinforce the systems, are estimated to cost between £600.000 and £1 million. “After the initial expenditure, as new customers are connected and new areas reticulated. system additions are expected to average about £700,000 and £850,000 for the first five years, and between £600,000 and £700.000 a year after that.” Estimated Demand The report said the annual expenditure to meet growing demand was much less than

the electricity reticulation investment required to deliver the same amount of utilisable energy to the consumer. By the seventh year of operation, the report said, all of the money needed for additions would be available from earnings. Sales of the gas in terms of thousand millions of British thermal units during the first 25 years of the pipeline would be: —

The report said these estimates were the minimum which should be obtained if the gas was competitively priced. “If gas supplies in excess of the proved reserves are discovered, sales in the 198388 period could easily be 10 per cent greater, and sales in the 1988-93 period 30 per cent greater.” In addition to the natural gas, large amounts of liquefied petroleum gases in the form of propane and butane will be produced at Kapuni. “They will make an important addition to New Zealand’s indigenous fuel supply and can be used to supply isolated homes and businesses having their own separate installations, and to supply gas undertakings not on the pipeline with part or all of their requirements.” Other uses could be to produce an auxiliary peak load supply for the nine gas undertakings, to increase their total daily “send-outs” above the field and pipeline capacities, and to augment supplies to the pipeline at the field in order to increase the amounts taken by the line above the field’s capacity.

Dealing with the pipeline, the report said gas would be pumped into it by a compressor station at Kapuni. Later, as the demand increased, other compressor stations would be installed at intermediate points. Bigger Pipes The size of pipe recommended by the Government’s consultants on construction of the pipelines. Pipeline Technologists Pty., Ltd., would transport the average daily amounts of gas expected to be available.

This, Zinder International believe, would be inadequate because it would not give sufficient capacity to take advantage of peak load expected between deliveries from the north and south pipelines. Neither would it permit utilisation of the ability of the field to deliver peak day amounts greater than the daily average. Zinder estimated the pipeline should be capable of carrying 125 per cent of the proposed average daily delivery from the field. This was the equivalent of 75 million cubic feet a day of raw gas from the well separators, which would mean that after the removal of propane and butane, 39 million cubic feet a day would be left for pipeline transmission. The company advocated construction of a north pipeline 9 5-8 inches in diameter and construction of an 8 5-Bin in diameter pipeline to the south. Power Conversion The cost of replacing waste if the gas was used for electricity generation would be about £7O million and up to £IOO million, said the report. “In addition, additional investment needed for electricity generation transmission and retici lation would amount to between £IOO million and £l6O million. “Use of the gas as gas will reduce by from 5 per cent to 10 per cent the quantity of additional electrical energy which has to be generated.

“The benefits from the use in the form of gas of the proved reserves will total at least £lBO million to £230 million. If possible further reserves are considered, the figure could be between £245 million and £3OO million.

Commertic cial 1968-73 .. 6,398 6,793 1973-78 .. 11,697 12,804 1978-83 .. 18,909 18,645 1983-88 .. 25,976 22,700 1988-93 .. 30.975 23,800 Total . . 93,955 84,742