Gas-import idea judged feasible

By CHRIS DANIELS

Two of New Zealand's energy giants, Contact Energy and Genesis Energy, will this week reveal more of their plans for importing liquefied natural gas (LNG) to stave off a looming energy shortage.

The two companies have spent a year looking at whether it is feasible to import shiploads of the gas, superchilled and condensed, before warming it up and pumping it into power stations.

A report to be published this week is expected to say importation is feasible, and recommend a more detailed study of how it might work.

Contact and Genesis, the two major thermal power generators, are increasingly hampered by a lack of natural gas to fuel their stations.

There are no plans for big new hydro-electricity developments and coal-fired stations emit more than twice the carbon dioxide of gas stations.

Contact has full resource consent to build power stations at three different sites, but cannot proceed without long-term certainty of gas supplies.

It will take the best part of a decade to gear up for LNG - particularly with the consents and construction needed for a "re-gassification plant" to warm up gas, which expands and is then piped to customers.

Taranaki would be a prime candidate for an LNG terminal.

US engineering and energy giant Kellogg Brown and Root was appointed in January to lead the study into the "logistical and market implications of importing LNG to New Zealand".

Gas for New Zealand could come from anywhere in the world, but Indonesia and Western Australia are the nearest suppliers.

If billions of dollars are invested in LNG infrastructure, long-term contracts for the gas would need to be signed with users, primarily the big thermal electricity generators such as Contact and Genesis.

There are fears this would stifle the local gas exploration industry, since the big customers would be tied up in contracts with the LNG merchants.

There is also the risk that a big gasfield could be found shortly after a spend-up on LNG infrastructure - leaving that asset stranded.

Steven Barrett and Murray Jackson, the chief executives of Contact and Genesis, said in January that they needed to "identify New Zealand's options" in case no large domestic gas fields were found and a gap between supply and demand occurred from around 2008-2010, as the Maui gasfield ran out.