Reprieve unlikely for NZ's Methanex Motunui plant

THE lights are going out at the Methanex Motunui methanol plant and only another Maui-sized gas discovery within the next four years will see the Taranaki complex - one of the largest of its kind in the world - reopened.
Reprieve unlikely for NZ's Methanex Motunui plant Reprieve unlikely for NZ's Methanex Motunui plant Reprieve unlikely for NZ's Methanex Motunui plant Reprieve unlikely for NZ's Methanex Motunui plant Reprieve unlikely for NZ's Methanex Motunui plant

Today saw the official closing ceremony for the giant 85-hectare site which has produced over 40 million tonnes of methanol since late 1985. The GTG (gas-to-gasoline) part of the former Synfuel plant was scrapped more than a year ago and now it looks likely the twin methanol trains will follow.

“I feel a huge amount of sadness and today’s closure is an indictment on a lack of planning [for future gas supplies],” Methanex NZ managing director Harvey Weake said this morning.

“I cannot think of another petrochemical plant in the world which has had to shut because of a lack of gas. I think there is less than a 50-50 chance Motunui will reopen unless there is a game-changing discovery within the next three to four years.

“Another Maui or something bigger, is needed. I do not think that Maui was a once-in-a-lifetime event. I believe there are others out there.”

But more gas exploration was desperately needed from major explorers with the capital and technical capability to drill the offshore wells needed to find another Maui (which originally contained about 3 tcf of gas when discovered in 1969).

In the mid-1990s Methanex campaigned to have a lower taxation rate for gas exploration introduced. Successive governments effectively ignored such pleas until earlier this year when a reduced royalty regime was introduced for 2004-09. But many in the industry have said the measures are too little and far too late to save Methanex.

Weake said the nearby Waitara Valley methanol plant -where nearly all remaining 80 Taranaki Methanex staff have now relocated - had enough Maui and non-Maui gas to run at full (520,000 tonnes per annum) capacity in 2005. Methanex has rights to gas from the Bridge Petroleum-Westech Energy Radnor field from early next year.

“We will be running the valley on gas from a bunch of supplies,” Weake said.

“But we will need to negotiate or renegotiate more contracts from 2006 onwards if this plant is to continue operating. We are confident there will be more Maui gas, that bodes well, and we are delighted with Radnor, every little bit helps.”

The former synthetic petrol pipeline from Motunui to Port Taranaki was being serviced to handle Radnor gas, which would increase Methanex’s options, according to Weake. He declined to comment on rumours that the company was negotiating to use Swift Energy’s Tawn gas or Greymouth Petroleum’s CO2-rich Kaimiro gas.

The Motunui site would be progressively mothballed over the next five months and then the lights would go out.

It was likely the formerly NZ$2 billion site - which had produced up to two million tonnes of methanol a year - would have little economic value after five years.

Weakes agreed it was ironic that Motunui was closing at a time the Pohokura onshore production station was being constructed next door and the Swift/Ballance Agri-Nutrients joint venture was planning to drill the Karaka-A1 well in the Waitara Valley early next year.