Gas line leak costs dairy industry $46m

Dairy industry hit by last year's Maui gas pipeline leak. Photo / Christine Cornege

More than 48 million litres of raw milk was dumped during the Maui gas pipeline emergency a year ago, a government-ordered report shows.

Milk processing plants were shut down during the five-day outage, caused by a landslide damaging a section of pipe in northern Taranaki.

The review by the Ministry of Business Innovation and Employment found that, throughout the affected areas of Waikato, the Bay of Plenty, Auckland and Northland, about $46 million was lost by the dairy industry.

Farmers were forced to spray milk on to pasture, tip it into ponds and bury it. Some dropped to once-a-day milking. A lengthy outage would have forced farmers to cease milking.

"Drying off a significant number of New Zealand's dairy stock early in the season would result in a dramatic decrease in milk production and have large negative economic consequences," the review said.

Disposing of waste milk was largely well managed with few reports of milk entering waterways.

"However, MPI considers that the shutdown of the dairy industry during the incident highlighted a major risk to the environment."

The potentially significant economic and environmental impact of a future incident has serious implications for the infrastructure risk management and contingency planning for the dairy industry.

Fonterra is reviewing its energy sources because more than 70 per cent of North Island processing capacity is dependent on gas. Back-up diesel energy sources are being considered at its Waikato processing plants in Lichfield, Te Rapa and Kauri, but this may be limited by the shortage of diesel supply and storage.

The pipeline carries gas from south of New Plymouth to the Huntly power station. Other users affected included electricity generators, hospitals, bakeries, restaurants and industries reliant on heat or steam from gas-fired boilers.

The review finds that defects or flaws in the pipeline - which could cost about $1 billon to duplicate - had not contributed but monitoring of areas vulnerable to landslides had been stepped up.