Pohokura shortfall delays Huntly decisions

News of the possible Pohokura gas field downgrade and delay has flowed on to Genesis Power's plans for its planned second gas-fired power station at Huntly.

Genesis chief executive Murray Jackson confirmed that the electricity generator had deferred making some important decisions about the $NZ400 million 360MW station until uncertainties regarding the size and timing of the Pohokura project had been clarified.

He told EnergyReview.Net that Genesis had been expecting appraisal drilling of the possible 1tcf gas field off north Taranaki to have been finished in time for the first tranche of gas to be "ready" for offer by March, with contracts awarded in June for delivery starting from late 2005-early 2006.

EnergyReview.Net has previously reported that though testing of the northern Pohokura-3 well is finished, there may be several months of testing for the southern Pohokura-1B well. Full appraisal of the field, including detailed reservoir modelling, may take the rest of the year.

Jackson also said that any delays in the Pohokura partners gaining Commerce Commission clearance for the joint selling of Pohokura gas might also further delay the project. Any decisions regarding this were not expected until July or August this year.

He added that Todd Energy chief executive Richard Tweedie had now confirmed what EnergyReview.Net reported last week - that the mid-case potential for the size of Pohokura field was now between 500-600 bcf, which contrasted with the last official Fletcher Challenge Energy estimate of 964 bcf of gas and 53 million barrels of associated condensate.

Jackson denied that Genesis had changed its plans to use gas from the yet-to-be-developed Kupe field as the preferred source of gas for the second Huntly station.

"Kupe was always going to be after Pohokura as it is smaller and will be more expensive gas."

Jackson said Genesis Power had chosen Mitsubishi Heavy Industries as the preferred supplier and completed resource consents for the so-called "e3P" project, but had yet to finalise long-term gas supply contracts.

Genesis would not proceed with the construction of a gas turbine until it had secured the necessary long-term gas contracts.

He said the gas would probably not be tendered till next year if Shell New Zealand, Todd Energy and Preussag Energie/OMV were still evaluating the field through to December.

ERN last September reported that Genesis was in discussion with Mitsubishi Heavy Industries, as the preferred contractor for the new 360MW Huntly combined-cycle power station, which will use about 20PJ of gas a year. The main contracts need to be awarded by this coming July to ensure the 30-month construction phase can be finished by the scheduled December 2005 deadline.

If commissioning of the second Huntly station slides by a year to December 2006, then this could exacerbate the supply-demand shortfall facing New Zealand.

Last year first energy consultant Brian Leyland warned of possible shortages in electricity supply as early as 2003-04 if there was a dry year.

Then Energy Minister Pete Hodgson last month issued a report by Dunedin consultants Energy Link which said the chance of a supply shortage was only one in 35 in the next four years, but this was contingent on new planned generation being built as signalled and demand growth averaging between 2-2.4% a year.