NGC steps up gas output

Chief executive Phil James told the annual meeting of the gas processing, transporter and wholesaling company, that the growth in the gas market was occurring in a climate of new certainty around New Zealand’s currently known gas supplies.

Resolution of the key transition issues, including future Maui deliverability, combined with the settlement of arrangements around the Kapuni indemnity gas and contracts for new supply from Kapuni and Pohokura, allowed NGC to construct our own supply contracts with more confidence, Mr James said.

In the past year the Kapuni gas treatment plant has been upgraded, primarily to process greater quantities of Kapuni gas for the retail market, as well as to receive gas from other sources, such as the new Kahili field. The Kapuni plant was now well positioned to play an important strategic role in getting to market gas discoveries that require processing.

In projects involving some $14 million of capital expenditure, the plant has been restored to full gas treatment capability with the recommissioning of one of the three Benfield trains that remove non-combustible carbon dioxide from the raw gas stream. The addition of a 100 tonne LPG storage vessel has almost doubled LPG storage capacity and removed a production constraint.

As former gas supply arrangements change, NGC is now processing more Kapuni gas, with treated gas output at the Kapuni plant increasing by almost 55% in the last financial year.

In the future, as a result of these projects the Kapuni plant will supply an additional 8 petajoules of treated gas a year, taking the annual treated gas output to over 22 petajoules. LPG production will increase from 35,000 to 40,000 tonnes a year due to improved yields.

On gas transportation Mr James said NGC expected to hear soon from the Auckland local authorities involved in our route designation application for a second pipeline from Huntly to east Tamaki.

Also $5.6 million was spent during the year to facilitate load growth on our lower pressure gas distribution networks.

"LPG was now driving considerable financial growth in the company", Mr James said.

In 2003, the LPG market in New Zealand grew by 12%. In 2004, it grew by another 8% and now stands at approximately 158,000 tonnes a year. The market growth has occurred primarily in the cylinder and small bulk segments. NGC’s LPG distribution and retailing business, On gas, recorded a sales volume increase of almost 13%.

Mr James said, higher market demand is also evident in a 20% lift in gas liquids production at the Kapuni gas treatment plant, while domestic market volumes handled by our 60%-owned subsidiary, Liquigas, went up by 15%.

As with natural gas, NGC is seeing an increasing price trend for LPG. This is partly due to the need to import LPG, at the international commodity price, to supplement indigenous supply during winter peak periods.