Pipeline failure: Defence wearing the cost of helping bail out the fuel industry

HMNZS Endeavour was sent to Marsden Point during the pipeline crisis. Photo / John Stone

The NZ Defence Force says it is absorbing the cost of coming to the rescue of the fuel industry following the failure of the pipeline from Marsden Point to Auckland.

During the response to the crisis, the Defence Force provided drivers for fuel tankers, petrol specialists to help at a fuel facility at Auckland Airport and the loaning of a filter to Wynyard Wharf where a chemical tank was converted to store aviation gas.

The HMZNZ Endeavour was also deployed to Marsden Point where it was prepared to move 4.6 million litres of diesel around New Zealand in an effort to free up industry resources to focus on Auckland.

"Aside from a cost of $8000 in allowances, there was no additional labour cost incurred by the Defence Force as a result of it providing personnel to the response," a Defence Force spokesman told the Herald.

"Noting that most of the $8000 was associated with allowances for Endeavour's crew, the Defence Force has elected to absorb these costs within its baseline."

The quicker than expected repair of the pipeline near the Marsden Point refinery and the success of land-based operations to increase fuel supply to Auckland meant that Endeavour was not required by the industry.

The ship returned to Devonport Naval Base once the Ministry of Business Innovation and Employment was satisfied that the fuel situation was in hand.

The cost of deploying the tanker was covered within the Defence Force's annual budgeted allocation of sea days, the spokesman said.

Around 10 government agencies were involved in responding to the crisis, caused apparently by degradation of a section of the 168km pipeline after it was scraped by a digger blade in a swamp.

Energy and Resources Minister Judith Collins said last week her priority was helping ensure fuel was flowing rather than any inquiry that would follow the rupture.

Setting up an inquiry is likely to be an early task for the next government and the second into the fuel industry within a year. Earlier this year Collins ordered in inquiry into pricing by petrol companies and following the report's release she said there were features which may not be consistent with a workably competitive market.

The big three petrol companies, Z Energy, BP and Mobil, are major shareholders in Refining NZ which owns and operates the pipeline. Although it has been repaired it is not operating at full capacity.

The jet fuel disruption during the past two weeks was costly for airlines which were forced to cancel scores of flights, make costly diversions to overseas airports to top up, and at one stage temporarily suspend sales. Air New Zealand - the airline worst affected by the fuel cuts out of its Auckland hub - has said it will establish what insurance cover it has before possibly exploring other ways of recouping costs.

It should be noted that the Marsden Refinery to Auckland pipeline while repaired, will be operating at 80 per cent capacity into the New Year

Judith Collins

Airlines were initially rationed to 30 per cent of daily allocations of up to four million litres a day at Auckland Airport. At the weekend this was reinstated to 100 per cent.

Collins said getting back to that level was "great news" for the start of the school holidays.

''It should be noted that the Marsden Refinery to Auckland pipeline while repaired, will be operating at 80 per cent capacity into the New Year," said Collins.

However, the industry was confident that the pipeline would be able to deliver the amounts of jet fuel airlines needed to operate normally.

Trucks would continue transporting the 1.5 million litres of jet fuel stored at Wynyard Wharf until a converted chemical tank was empty, which is expected to be towards the end of next week.

Travel Agents Association NZ say travellers were pragmatic about the disruption to scores of flights, which meant they had to be rebooked on others.

"What it showed was that travel agencies and the airline community is very good at dealing with disrupts as a whole," said the association's chief executive, Andrew Olsen.