Petrocorp gets green light to build $130M methanol plant

Press, 1 April 1980, Page 1

Petrocorp gets green light to build $130M methanol plant

PA' ' Wellington The Petrocorp-Alberta gas methanol plant, which has been given approval by the Government, is expected to be working by mid-1983. The Minister of Energy (Mr Birch) said yesterday that the plant, costing $l3O million at 1980 values, would produce 1200 tonnes of methanol a day.

The Cabinet opted fori ■the Petrocorp-Alberta gas proposal at its meeting yesterday -after months of debate by Ministers and their advisers.

It chose the Petrocorp project in preference .to the bigger 2000 tonnes a day proposal put up by the BP-Challenge-Fletchers consortium.

The Prime Minister (Mr Muldoon) announcing the Government’s decision,

said the greater risk in finding a market for the extra .800 .tonnes a day was'possibly the final factor in the Cabinet’s choice, but it was only one of many factors. Mr. Birch, talking to reporters later, said there' was substantial agreement arpong /experts,' including the?/“Government’s own , consultants, ..that the over-seas-market- fpr metfaanol was limited'tpSabouV 1200 tonnes a day- ■■/. “So ’.'there was ' substantial risk in going to. a larger plant,’’ he said. (The BP consortium had argued it - was a fair commercial risk to build the 2000-tonne a day plant," with the possibility jof/the additional output being used if .the Governineht favoured blending" ntethanol and petrol)".. , Mr Birch said the estimated cost of $l3O million

was “very carefully prepared” and he expected if to vary only in money, value terms. Alberta Gas will have a 49 per cent shareholding in the venture. The other 51 per cent will be heldby Petrocorp, ■ private firms and the public, e

Mr Birch said the final Petrocorp shareholding would depend on the amount of private ini'vestment in the project.

- Mr Muldoon said Challenge and Fletchers could “come along and talk” if they were interested in taking part with Petrocorp.

The chairman of' the Challenge Corporation (Mr R. Trotter) 'who had described the BP scheme as ./'vastly superior”; to " the / Petrocorp plan, said earlier this ; year he had rejected invitations to join the Petrocorp project.

Petrocorp’s chairman (Mr F. W. Orr)' said after the 1 decision was announced that the corporation .was “most gratified” it had been given the responsibility of building New Zealand’s first methanol plant, “We have always believed that a' partnership between New Zealand and Alberta Gas Chemicals, Ltd, was the better proposition in terms of national interest and I would stress that' this has been our major consideration throughout the negotiations,” Mr Orr said.

“We also believe that speed has been a most important factor and we are confident we can have a methanol plant working in less than two years after, the? necessary environmental and other clearances have- been obtained,”, he said.

Mr Muldoon said yesterday the methanol project would qualify for “fast track” treatment under the controversial National Development Act passed last year. Mr Birch said he did not expect .the project to be delayed in the’courts but it would clearly have to follow established planning procedures.

If would be a matter for the company to decide whether it would apply for “fast track” treatment.

The Under-Secretary of Energy (Mr. Brill) said recently that Alberta Gas had a reputation as a dynamic and efficient methanol producer and at present had a virtual monopoly of exports to the Pacific rim countries in which New Zealand was interested. Alberta Gas had a proven record in the Pa-

cific and could be a formidable competitor if it was not involved in the New Zealand plant, he said. On the other hand, the Japanese firm, Mitsui, and ICI and Shell, which would have been partners in the BP project, might themselves become competitors if they were not permitted an equity in New Zealand, Mr Brill said at the time. He said the issue boiled down to a dilemma which was very familiar in business — “a smaller project which is a sure bet and clearly profitable, or a more ambitious one with elements of risk but promise of greater rewards.” Labour’s shadow Minister of energy (Mr Tizard) said the decision to approve the Petrocorp methanol plant might seem to . be a great step forward.in* the development of liquid fuel supplies.’

“In fact, it only provides us with quantities tof methanol for export, which in turn will pay for expensive imported oil,’? he said. ' '• “However, the Labour Party is pleased that at long last some decision has been made on the ' methanol plant. “We are pleased that Petrocorp, representing the New Zealand public, will have the major responsibility, owning 51' per cent of the deal. We would, however, be better pleased if the private New Zealand companies were to take part of the 49 per cent share of Alberta (Sas, rather than of Petrocorp’s 5. per cent. This would be similar to arrangements in other countries where the overseas ownership is limited to 25 per cent,’’ Mr Tizard said.

From

MIKE HANNAH

Common sense influenced the Government’s decision to choose Petrocorp’s methanol proposal, . said Petrocorp’s chairman (Mr F. W. Orr) last evening. The Government was not prepared to risk the “national situation” -with a market in excess of Petrocorp’s conservative approach, Mr Orr said.

“It had nothing to do with State-owned versus private The: Government’s decision was based on a 1200-tonne ; a , day proposal versus a 2000-tonne a day proposal/ It was really a judgment'pf one project over another.”"

The decision will not mean the end of the Ml 5 proposal (a blend of methanol and petrol) or the substitution of diesel by methanol. Mr Orr said that Petrocorp would seek first to feed the New Zealand market. Petrocorp’s scheme could be extended to

include Ml 5 and diesel substitution, if they were adopted by the Government. A Government decision is expected in November. Mr Orr was in Wellington with Petrocorp executives last evening, celebrating the Government’s , decision. The decision had left him feeling “nothing but happiness.” . Action had already-started to clear the zoning for the methanol plant in- Taranaki, Mr Orr said. Petrocorp lookup the option on the final parcel of land last week. He said that the proposal would be processed through the, National Development Act. Asked if he expected any opposition on environmental grounds, he said: “There are a few crazy people'in this world going to make things difficult.” The general manager of Petrocorp (Mr J. Hogg) said that the land in Taranaki had been chosen to avoid an eyesore.