Good news for investors, and bad news for motorists as the Marsden Point Refinery chews through record amounts of natural gas.
In the past two months, it has used more than 12,000 tonnes of Taranaki gas to power its oil refining operation.
Refining NZ chief executive Sjoerd Post says it's cheaper than oil power, making for higher margins.
But he says it's not a good story in terms of reducing prices at the pump, as pump prices are based on import parity for product from Singapore and Korea.
As well, says Mr Post, natural gas burns cleaner and more efficiently than oil.
Marsden Pt oil refinery is taking advantage of historically low wholesale prices for locally produced natural gas to improve its refining margins as electricity companies, in particular, continue to use far less gas than in the past. Refining NZ said it had achieved a US12c per barrel uplift in Gross Refining Margins in May and June, US1c better than planned, and that the company was "well on the way" to achieving its targeted US11c per barrel improvement from the natural gas initiative over the course of the financial year.
Gas was cheapest in winter months when the dairy industry, also a major gas user, was at its seasonal low point for milk processing.
Wholesale gas prices have plummeted as a combination of weak electricity demand and the commissioning of a string of renewable wind and geothermal energy projects have markedly reduced the use of natural gas and coal to produce electricity.
That trend has already seen Canadian methanol producer Methanex restart and expand its three Taranaki methanol production trains after mothballing them during much of the 2000s, when gas prices were high and shortages were feared.
The gas move is one of four initiatives the refinery is pursuing, targeting a US66c per barrel improvement in gross refining margins, which have been low over the past year, owing to a global glut of refining capacity.