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Gas price for Contact hits $9 a GJ
14 September 2010 - Contact Energy says the average cost of natural gas it bought for use in power generation rose by 18% to $9 a gigajoule in the latest financial year.
Sources: Contact Energy and Lindsay Clark
Contact, the largest user of gas for electricity generation, says in a presentation on its 09/10 year (ending June 30) that underlying unit gas costs increased by $1.20 a GJ to $8.16 a GJ. But the residual cost of paying for gas under take-or-pay contracts in a wet year with greater hydro electric generation meant reduced use of gas for thermal generation. This added a further 84 cents a GJ to effective gas costs to make the total $9 a GJ cost.
Contact says its Ahuroa gas storage project near Stratford injected 5.2 PJ of gas into the underground storage reservoir in the June 2010 year mitigating $33 m of gas take-or-pay costs. The reservoir now contained about 11 PJ, of which 6.2 PJ was cushion gas. The extraction facility is due to open in January. Commissioning of the Stratford 200 MW flexible gas-fired peaker station is also now underway.
Contact says that if the Stratford peakers and the Ahuroa gas storage facilities were fully operational in the latest financial year earnings before tax would have been up to $60 m higher with thermal plants shut during low-price periods and more gas injected into storage.
Additional gas peaking plants will be needed as wind generation development continues. Weather-dependent renewable generation required thermal generation to balance supply. Contact is currently seeking to consent an option for a new set of 200 MW peakers which is likely to be built at one of its existing thermal sites at Otahuhu, Stratford or New Plymouth.
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