Methanex slash production following Maui shortage report

Methanex New Zealand has drastically cut its methanol production in the wake of the devastating Independent Expert's final report of remaining Maui gas reserves.
Methanex slash production following Maui shortage report Methanex slash production following Maui shortage report Methanex slash production following Maui shortage report Methanex slash production following Maui shortage report Methanex slash production following Maui shortage report

When the Netherland Sewell and Associates International report was released to the parties involved on Friday, February 7, Methanex had already nominated its gas usage profile for the next seven-day period so its 2.4 million-tonnes-per-annum production facilities were not significantly affected last week.

However, the company has since closed down one of two trains at the Motunui complex, while the other is just idling, as is the smaller Waitara Valley plant. Total production is now less than 40% of the maximum capacity of approximately 6500 tonnes per day.

The final NSAI report concluded there was only about 370 Petajoules of economic gas left in Maui and NGC Holdings said Methanex had already used 77PJ more than it should have.

However, Methanex management swiftly launched legal proceedings against the Independent Expert and other parties to the Maui sales contracts - field owner Maui Development Ltd, the government, NGC and Contact Energy - as it relates to the methodology used by Texas-based NSAI to arrive at its conclusions.

Morale among the 200 Methanex Taranaki staff and the 20 or so Auckland-based staff is not as bad as at Shell New Zealand, where it is reported morale is almost non-existent, given the Royal Dutch Shell global restructuring of its EP activities.

"Methanex people have known about this (the possibility of production cutbacks or closures) for a long time, since 1996 in fact. Everybody is guaranteed a job until the end of this year, which is better than a lot of other employers would give. So morale is not bad here, considering," said one employee, adding that it was encouraging seeing management fighting for their future by taking court action.

Company Asia-Pacific vice-president Bruce Aitken told EnergyReview.Net that Methanex had always informed its staff about likely future gas supplies and plant operations. "So they were not too shocked by the latest news, though they are very concerned about next year, which is understandable."

Industry rumours continue that the Maui partners - Shell New Zealand, Todd Energy and OMV Petroleum - will "find" more Maui gas once the 370PJ has been taken from the field, but that the "new" gas will certainly be more expensive.

Commentators say the Netherland Sewell phrase "at the Maui price" indicates there is more gas there, but only at an increased price. As well, Energy Minister Pete Hodgson has described the 370PJ of gas as "economically recoverable", implying more gas exists.

It is known Netherland Sewell's determination of economically recoverable reserves included the Maui South and Ihi prospects, which commentator say could contain 400PJ or more, as well as about 55PJ in the Kapuni D sands of the northern Maui A lobe.

However, MDL has told the Independent Expert that either these are not proven reserves or not able to be accessed from existing Maui platform wells.

It is further understood that Maui operator Shell Todd Oil Services is about to receive the results of last year's 3D seismic survey over the Maui mining licence, which was done over the same lines as the 1991 $35 million 3D survey that covered most of the Maui mining licence.

This interpretation, comparing the 1991 and 2002 survey results, should give the answer as to whether there may be further economically recoverable gas beyond what has been determined by NSAI. "If STOS gets more data and facts, then the picture may well change," said one commentator.