The Press WEDNESDAY, JANUARY 7, 1976 Maui gas

Press, Volume CXVI, Issue 34044, 7 January 1976, Page 10

The Press WEDNESDAY, JANUARY 7, 1976 Maui gas

New Zealand at present secures less than 5 per cent of its primary energy from natural gas. Ten years from now, natural gas will probably be providing the country with more than 30 per cent of the energy it needs. The country’s bill for imported fuel will accordingly be much less than it would have been without the discovery of the Maui gas and condensate field. The placing of the first production tower on the Maui field in the first few days of 1976 is a significant element in the changing pattern of production and consumption of energy. Much work has yet to be done before gas and . ondensate How ashore in October. 1978. Pipelines must be laid across the floor of the sea and to the power stations in New Plymouth. Huntly, and at Auckland. The total cost of developing the field and delivering the gas to the power stations, where most of it will be used for some years, is likely to exceed 500 million dollars. On the other side of the world, the costs of developing the North Sea oil fields have escalated so alarmingly that some fear has been expressed that, if world oil prices fall dramatically, North Sea oil will become uneconomic because it is so expensive to produce. The benefits to Britain of North Sea oil would then be uncertain.

This should not happen m New’ Zealand, even if oil prices fall, because the agreements between the New Zealand Government and Shell BP and Todd Oil Services. Ltd. guarantee that gas will be supplied to the Government at a price which will make it competitive with other fuels. The price to be paid by the oil companies for the condensate from the Maui field is set in such a way that changed circumstances might confer considerable additional benefits on the oil companies. Additional benefits will also accrue to the Government if this happens, and this is no reason to tamper with an agreement which seems to be to the country’s advantage. But it is not a reason to regard the pricing policies of the Maui agreements for condensate as necessarily' the best pattern to follow should other gas or oil fields be discovered off the New Zealand coast.

All the gas produced from the Maui field will be sold, in effect, to the New Zealand Government. Telling criticism has been levelled against the decision to burn large quantities of the gas in thermal power stations to produce electricity. But there is no way to get round the fact that the early development of the field was only feasible because the Government could guarantee a market for the large volumes of gas that thermal stations use. No other use would have provided a market for the gas in the next few years large enough to justify the huge investment needed to develop the field. But the higher cost of alternative fuels, notably oil, means that the Government should hesitate before committing additional large quantities of gas to the relatively wasteful use of thermal generation of electricity'. The Labour Government had already decided to divert “ a significant proportion ” of Maui gas into domestic, commercial and industrial use rather than to use it all for the generation of electricity. The gas can be used as a premium domestic fuel, and the South Island’s claim to be provided with gas for this purpose must be given due attention. The gas may also be used as a fuel for vehicles and as a raw material for a petro-chemical industry. The Government still has difficult decisions ahead of it in deciding how the gas not needed for the power stations already planned can best be used to New Zealand’s advantage in the 30-year term of the gas purchase contract.