Genesis Energy confirms $520m power plant for Huntly

5.30pm UPDATE

Genesis Energy today confirmed it will spend $520 million building a 385 megawatt (MW) combined cycle gas turbine plant at Huntly.

Genesis chairman Brian Corban said the plant - to be known as Huntly E3P - would help meet the nation's increasing demand for electricity.

"The new high efficiency plant will provide 385MW of electricity, enough power for more than 350,000 homes," Mr Corban said.

"Leading edge technology also means the plant will be 50 per cent more efficient than the current Huntly plant."

The plant would be commissioned in late 2006.

Combined cycle power station technology was regarded as the most advanced means of converting gas into electricity.

"The new plant will use a gas turbine first, then use what would otherwise be waste heat to generate more electricity using a steam turbine," Mr Corban said in a statement.

Already work was underway to upgrade the Tainui Bridge across the Waikato River at Huntly, so it could bear the 500 tonne loads to the plant site.

Genesis' announcement was welcomed by Finance Minister Michael Cullen, who said it would bring significant new electricity generation on stream to meet medium term demand.

Dr Cullen said the Government had agreed to share a limited amount of risk with Genesis around the long term supply of gas.

"Without that commitment from the Crown, Genesis would not have been able to proceed within normal commercial parameters," he said in a statement.

Energy Minister Pete Hodgson said the risk sharing arrangement was a "one-off" to smooth the transition to a post-Maui environment.

The Royal Dutch/Shell Group last year said the offshore Maui field may run out by 2007, two years earlier than expected.

An alternative gas supply had yet to be confirmed.

Both Genesis and the Government had taken steps to reduce uncertainty around future electricity supply, Mr Hodgson said.

Genesis had entered long term contracts for Kupe, Mangahewa, McKee and Pohokura gas, while the Government this year introduced gas exploration incentives.

Mr Corban said Genesis had made the Huntly E3P project possible by selling down its share of the Kupe oil and gas field to 31 per cent and contracting for 250PJ of its gas.

"Confirming long-term significant gas contracts with Todd Energy and Shell NZ Ltd, also mitigates our risk beyond the projected run down of the Maui field," he said.

In May, Electricity Commissioner Roy Hemmingway said Genesis' plans for a new power station at Huntly would provide breathing space and firm up electricity supplies from 2006 to 2009.

But new power plants were still needed from 2009, and more gas supplies were needed after 2015, he said.


- NZPA