CNG could replace Maui

New Zealand energy companies are considering importing compressed natural gas to help make up a possible gas shortfall when the Maui field runs dry in 2010.

Todd Energy managing director Richard Tweedie told the Business Herald that Todd Energy, owned by Wellington's wealthy Todd family, was in the early stage of exploring the potential of the fuel, but at this stage no investment was planned.

"There has been a discussion for some time from interests in Papua New Guinea, who have been talking to a number of parties in New Zealand, not only us, about the possibility of bringing in ship-borne CNG," Tweedie told the Business Herald.

"We are talking and looking at that and we have some potential interest."

He did not say who else was involved.

As the Maui gas field, off the south coast of Taranaki, nears the end of its life, concern is mounting about how to make up the energy shortfall if no new gas fields are found.

Tweedie says CNG would overcome several objections to one of the alternatives gaining traction - the importation of liquefied natural gas. But it may be more complicated and expensive.

"It does not have any of the problems of regasification of LNG. It can be brought straight into New Zealand and be put straight into the pipeline system. The CNG alternative is a lot more benign and there is a lot of it in Papua New Guinea."

If energy companies decide LNG is the most viable option, they would most likely - with Government help - spend as much as $1 billion to build an LNG terminal at Marsden Point or New Plymouth. Here LNG would be received from massive ships, stored and later transformed into a gas before being piped into the national gas grid.

But Tweedie and others have cautioned against a hasty move, saying the cost and the potential dangers of LNG are too high. They warn the risks of New Zealand becoming overly dependent on offshore energy and the vulnerability of the economy to a failure at an LNG terminal need to be considered.

Tweedie also believes a hasty decision to import LNG may squander the chances of New Zealand using indigenous energy sources to make up the shortfall. As an LNG terminal is so expensive, it would need to be underwritten by long-term contracts from the major gas users such as electricity generators Contact and Genesis. But the contracts would cut demand for indigenous gas and reduce the incentives for oil and gas exploration.

Tweedie also said the CNG technology could help New Zealand exploit fields too small to justify a permanent connection to the main gas grid.

"You may be able to use small ships to transport CNG into local ports and into a pipeline," he said.

ENERGY TO BURN

Compressed Natural Gas (CNG)

* An emergent technology;

* Would be brought to New Zealand in ships;

* Can be piped straight into the national grid.

Liquefied Natural Gas (LNG)

* Also would be shipped to New Zealand;

* Needs to be converted back into gas at a plant costing up to $1 billion before it can be put in the national grid.

Todd

* Todd Energy is one of the business interests of Wellington's Todd family.

* It began exploring for oil in the 1950s and was involved in the discovery of the Kapuni field and the Maui gas field.