Genesis Energy sure of gas supply into 2030s

Genesis has a 46 per cent stake in the Kupe gas field. Photo / Supplied

Genesis Energy says it can guarantee gas for its customers into the 2030s but is not making plans beyond that.

The company has a 46 per cent stake in the offshore Kupe field which produced record quantities of gas and oil during the past year.

Genesis chief executive Marc England said that record production from that field driven by more demand for thermal generation at its Huntly power station in the year to June 30 during which the 51 per cent government-owned company made a net profit of $20 million.

The company is New Zealand's biggest electricity and gas retailer with 650,000 connections throughout the country.

He said even if there was no development of the Taranaki field in ''phase two'' to squeeze more out of it, there would be sufficient natural gas and LPG to supply its customers well into the 2030s.

Although flow rates would decline, England said he was not worried about the Government's decision to ban new offshore oil and gas exploration.

Origin Energy and New Zealand Oil & Gas are also stakeholders in Kupe whose operations fall outside the Government's decision in April to halt new permits as existing permits are protected.

''It doesn't really affect us - we've got an asset there that is going to be producing into the 2030s - we're not sitting here particularly focused on it,'' said England.

''Without getting into the politics you can import LPG. And it wouldn't be too hard to build an LNG import facility for some point in the future.''

The cost of building liquid nitrogen gas terminals — to convert imported gas for use throughout New Zealand — had fallen significantly in the past decade.

''I'm not predicting that as the future for New Zealand but I am saying that is an option in the 2030s. It's so far out we're focused on what we're doing now and the 2020s,'' he said.

''We can guarantee supply into the 2030s, we're not thinking beyond that right now.''

Genesis last week announced natural gas increases for about 54,000 customers, the first in several years and was now looking at increasing LPG prices. It has 59,000 LPG customers following the acquisition of Nova earlier this year.

''We held off doing any price rises on LPG last year as we wanted to stabilise the customer base but we are now confident that we can - there haven't been any price rises for a while and we've got a carbon impact playing through on that,'' said England.

He said the company faced headwinds of a planned Huntly maintenance shutdown and the impact of carbon charges.

During the past year operating earnings increased 8 per cent after dry, still weather boosted demand for coal- and gas-fired generation from Huntly.

Earnings before interest, tax, depreciation, amortisation and changes in financial instruments climbed to $360.5 million in the year ended June 30, from $332.5 million a year before.

Net profit fell to $19.8 million, down 83 per cent from $118.7 million the year before. The change reflects higher depreciation charges and a $100 million swing in the value of the Rankine units at Huntly.

Genesis has pledged to stop running the coal units routinely by 2025 and shut them entirely by 2030. Having written up their value by $51.5 million last year, it wrote them down by almost $49 million this year.

The company said the lower valuation reflects lower price and generation volume assumptions for the units, offset by the life extension to 2030. Despite an unplanned maintenance shut at one of the firm's Tekapo plants, generation volumes increased 11 per cent.

The firm also benefited from an increased share of record gas production from the offshore Kupe field. Investors registered on October 5 will get an 8.6 cent final dividend on October 19. A year ago the company paid 8.4 cents.

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