NZ petroleum players call for regulatory revamp

NEW Zealand’s oil and gas regulatory regimes need to be improved to ensure the country’s petroleum reserves are effectively and efficiently developed, spokesmen for two local companies told the New Zealand Gas Summit conference in Wellington this morning.

Greymouth Petroleum chief executive Mark Dunphy and Todd Energy acquisitions and development manager Rodney Deppe said improvements, particularly in gas transmission, were needed to ensure future gas discoveries could be economically developed.

“We keep the mist around the industry here; it’s quite hard for outsiders to know much about what is going on here,” Deppe said.

“If we are trying to encourage oil and gas exploration in New Zealand, one of the keys is access to infrastructure.”

Dunphy said the New Zealand Government should give further incentives to exploration and production, encourage domestic companies to become involved in the industry, and consider using New Zealand methanol and biofuels in petrol blends.

He said local downstream companies Genesis Energy and Mighty River Power had paid premiums to become involved in the New Zealand upstream industry.

“We must encourage local companies; local content must also be recognised,” Dunphy said.

“We should provide a mechanism so that others can join overseas companies.”

Deppe said New Zealand had numerous disadvantages – including its smallness, distance from major E&P service centres, and uncertain and restrictive access to essential infrastructure.

Private parties had no automatic right of gaining access to monopoly infrastructure, competition was weak and high pricing structures produced inefficiencies, he argued.

“New Zealand markets are controlled by field operators or infrastructure owners,” Deppe said. “That’s a key issue for people looking to come to New Zealand.”

Gaining access to appropriate processing facilities and gas entitlements was also a major problem for smaller players.

“Protocols are needed for small equity partners and the efficient access to infrastructure facilities,” he said.

“Failure to gain economic access to infrastructure quickly and with certainty remains a major disincentive for exploration and production.”

Dunphy said adequate energy infrastructure, for gas and electricity, north of Huntly was becoming critical, particularly considering that Mighty River Power’s new 45MW gas turbine at its Southdown, Auckland, power station was due to start operating late this year.

He said Greymouth would continue acquiring small gas-fired power generation equipment for distributed electricity generation and its 154 petajoules Turangi gas-condensate field in onshore Taranaki could offer some sort of “spot market” for gas.

The company was also considering offering “winter and summer” priced gas to electricity generators, taking into account power demand differences in those seasons.

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