New Zealand Considering Importing LNG ?  

Posted by Big Gav in , ,

The NZ Herald has a report that local utility Contact Energy is looking at building an LNG import terminal to fuel its existing gas fired power stations - Contact says demand means imported gas - at a cost.

Contact Energy is preparing to import gas if needed but warns it will be the most expensive of all generation options.

Managing director David Baldwin says it is estimated imported gas used in generation would be twice as expensive as existing domestic supplies.

Without major discoveries, the company believes domestic gas available for power generation is not assured and it had already been hurt by steep price rises in the past year.

For long periods during the 12 months to June 30 the switch from cheap Maui gas to onerously contracted Maui and Pohokura gas meant Contact was left with no option but to run its gas-fired stations at a loss.

New base-load gas-fired generation remains unlikely.

"Even if you took the most conservative demand profile for gas there looks to be a need to import gas sometime in the middle of the next decade in order to meet demand," Baldwin said.

While explorers, such as Todd Energy, are confident major gas discoveries to replace the dwindling giant Maui field will be made, Contact is preparing to import gas although it is changing tack on how that would be done.

The company and Genesis Energy had planned a land-based terminal at New Plymouth but had taken the decision to write down its $2.8 million initial investment because there was a cheaper, more flexible alternative.

New technology would allow Contact to buy LNG by the boat load which can be gasified on tankers and pumped straight into its $250 million Aharoa gas storage facility.

Baldwin said a large investment in heavy LNG terminal infrastructure would effectively commit the country to importing gas for many years.

LNG import proposals are likely to be contentious because they expose New Zealand to international gas prices and would impact on electricity prices, energy security and could discourage domestic exploration.

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