Giant Mitsui eyes Maui gas

Press, 20 February 1986, Page 20

Giant Mitsui eyes Maui gas

By

OLIVER RIDDELL

in Wellington The Japanese giant Mitsui conglomerate has expressed interest in using natural gas from the Maui field for a new ammonia plant.

The Government has been approached by Jardens, on behalf of Mitsui, for access to the 30 petajoules a year still available for allocation. The decision earlier this week to make 30 to 40 petajoules a year of the Maui reserves available for electricity generation leaves about 30 petajoules a year unallocated. This 30 to 40 petajoules a year allocation roughly doubles the natural gas already used for electricity.

The Minister of Energy, Mr Tizard, said the decision to make more gas available for electricity still left concerns about whether the gas should be used now rather than reserved for later. Ample gas was available within the allocation for any foreseeable expansion in either gas reticulation to homes or for use in vehicles as C.N.G.

Supporters of leaving the gas in the ground for some unspecified future users all seemed to ignore the economics of the present system, he said. Electricity had a full distribution system that would

need only minor alterations in the foreseeable future; gas would be most expensive to reticulate outside the areas in which pipes were now laid. The only really economic time to expand the gas reticulation system was when significant blocks of housing were being built, and if any early approach were made to section owners. In established residential areas, people converted to gas only when building a new house or replacing an appliance. Such sporadic development was quite uneconomic at today’s costs and interest rates, Mr Tizard said. Most recent domestic development had depended on industries converting to gas with a big enough demand to carry domestic applications associated with it.

Extending the lift of the gas field by regulating the quantities taken from the Maui platform would be a much more expensive proposition than using the gas for electricity. Regulating the off-take .would have two drawbacks:

1. The design life of the present equipment and the substantial cost of extending it for another 20 to 25 years; and

2. The effect of the cash flow of the present facilities because of the take-or-pay agreement originally signed, which

only recently had reached the level at which the gas paid for was being drawn from the field. Mr Tizard said that in either case the economics of the proposition to leave gas in the ground were poor compared with the concept that a commercial price should be paid for the gas to make electricity. This was especially so when a relatively small extra amount of gas

would be drawn though the present structure. This would improve the economics of the present scheme and reduce the forecast life of the total field by no more than a year, he said. But the . Opposition spokesman on energy, Mr Tony Friedlander (New Plymouth), described the decision to make more gas available for electricity ■ generation as “the most gutless de-

velopment decision of the century.” The decision not only consigned to waste a huge amount (nearly twothirds) of the energy of the gas but it abandoned attractive and viable large-scale development prospects. Mr Friedlander said the decision was a betrayal by the Government of New Zealand’s opportunities for resource development