Kupe joint venture awards $313m contract for field development

The joint venture partners of the Kupe gas and oil field in Taranaki today announced the award of a US$200 million ($313.8m) contract to Technip Oceania Pty for overall development of the billion dollar project.

The partners announced in June they were proceeding with the $980m development of the field, which will play a crucial role in the ongoing supply of gas, as the giant Maui field is exhausted.

Technip, global construction specialists, will be responsible for the overall development of the project.

The company was in May declared "preferred contractor".

The contract will be executed in an alliance arrangement with Technip and the operator's executives, leading a team resourced from both companies.

The contract covers the design, engineering, procurement, installation, construction, pre-commissioning and commissioning of key parts of the project.

It will oversee the construction of an unmanned wellhead platform with capacity for up to six wells; a 30cm multiphase pipeline to shore and umbilical from the platform to shore; a horizontal, directionally drilled shore crossing; onshore processing facilities; an export pipeline for natural gas; and loading bays for LPG and condensate.

The alliance structure incorporates shared risk/reward arrangements.

Installation of the offshore platform is expected to begin in the first quarter of next year and construction of the production station in the fourth quarter, with commercial production expected by mid-2009.

Kupe is expected to produce around 20 petajoules (PJ) of gas a year, about 15 per cent of the country's current annual demand.

It will also produce light oil condensate and LPG, starting at 1.7 million barrels a year and 90,000 tonnes a year, respectively.

The Kupe field is operated by Contact Energy's 51 per cent owner Origin Energy, which has a 50 per cent stake.

Listed explorer New Zealand Oil and Gas (NZOG) has a 15 per cent stake, state-owned Genesis Energy 31 per cent, and Mitsui New Zealand 4 per cent.

Genesis Energy is taking all the gas from Kupe and has a 20-year supply agreement.

It plans to build a gas-fired power plant at Huntly and another north of Auckland, in Rodney on the shores of the Kaipara Harbour.

- NZPA