Taranaki gas field an expensive flop

A newly discovered Taranaki gas field has virtually run dry, leaving its embarrassed owners wondering what has gone wrong.

Also wondering is gas transmission company NGC, which just three months ago commissioned a $9 million production station specially built to take the field's gas - but which now has no flow to process.

NGC shares closed 6c down at $3.04 yesterday.

The gas field is Kahili, east of Inglewood, which was discovered two years ago. Its joint-venture owners, headed by Wellington-based Austral Pacific Energy, had estimated that the single producing well drilled so far would produce a total of about five petajoules (PJ) of gas.

But it has produced nothing like that. Whereas the well flowed up to six million cubic feet a day shortly after its discovery, by last month this had fallen to about 500,000 cu ft, and now the flow has fallen to a trickle, leading Austral Pacific to admit the well is unable to maintain viable production.

As a result, the well is about to be shut in for an extended period to try to encourage a pressure build-up, which might allow it to flow again.

Austral Pacific chief executive Dave Bennett admitted that Kahili-1 was not performing anything like anticipated.

"We're disappointed - there's no beating about the bush over this."

Dr Bennett said the joint venture was now studying options to get the field back into production.

NGC external relations manager Keith FitzPatrick would only say that his company was disappointed the Kahili field was not performing to expectations.

"Obviously we'd have preferred this situation with Kahili not to have happened, but it has. But we haven't written the field off yet," he said.

NGC made a $2 million prepayment this year to the field's owners in return for access to a proportion of the Kahili gas for the duration of the field's life, and it also spent $8 million building the production station and laying 12km of connecting pipelines.

- NZPA