Gas players ready for possible Maui shortfall

By Phil Boeyen, ShareChat Business News Editor

Tuesday 13th November 2001

Energy companies Contact (NZSE: CEN) and NGC (NZSE: NCH) are reassuring gas customers over a possible shortfall in the supply of Maui gas.

The companies say they were updated last week by Maui Development Limited on the likelihood of a shortfall in 2007 and are incorporating the data into future planning.

Contact Energy chief, Steve Barrett, says a possible shortfall was identified as a risk for the company in the prospectus at the time of the sale of Contact in 1999.

"Within the company's risk management framework we have taken steps to prepare for this potential eventuality. Our future planning can now adapt given the early warning provided by this analysis."

Mr Barrett says while the company is still examining the overall impact of last week's briefing, including the consequences for the electricity market, its customers won't be affected.

"The company can assure residential and commercial gas consumers that there will be no material impact on the availability of gas as their use represents a very small proportion of total gas consumption.

"Contact will continue to seek new gas supplies to augment and eventually replace the supply of gas from the Maui Field."

Mr Barrett says he expects the new information will stimulate further exploration for new sources of gas and Contact will work with MDL and the other Maui gas users to find other reasonable means of mitigating the risks of any shortfall.

Natural Gas Corporation says the shortfall only represents around a tenth of requirements.

"At the level of gas reserves indicated by the studies, around 3800 petajoules (PJ), NGC has a reduction in its Maui offtake of about 60 PJ over the remaining life of the field. This represents only about 12% of NGC's total available gas entitlements," says chief executive, John Barton.

"Accordingly NGC is confident of its continuing ability to meet the needs of its customers and plant."

Mr Barton says domestic and small consumers use less than 3% of New Zealand's gas demand and the refined estimates should not be a concern for residential users.

He also says he is optimistic that MDL will be able to recover additional gas from the Maui field.

"Further, recent discoveries such as Pohukura, and other undeveloped fields such as Kupe, should now be able to be brought into production with greater certainty."

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