Gas shutdown set to blow up power price

By FIONA ROTHERHAM

Wholesale electricity prices are expected to leap significantly this weekend following the planned maintenance shutdown of the offshore Maui gas field.

Domestic users of both electricity and gas are unlikely to be affected during the 70-hour shutdown although it will hurt big industrial users and gas-fired generators.

The Maui pipeline will be depressurised from 7.30 am on Friday until mid-morning on Monday to replace a valve at the Oaonui production station.

Transpower, which operates the national grid, estimates generation should match even worst-case scenario demand, despite the forced shutdown of four North Island gas-fired stations producing around 22 per cent of total generation.

Huntly will convert to coal, although one of its 250mwh units remains out of action after fire damage last year. The total North Island demand is estimated at 3250mw a day and there is little spare capacity available.

Transpower Grid Operating Services manager Mark Pearce said line companies were unlikely to cut power to North Island consumers even during a cold snap unless something else went wrong, such as a significant failure.

The maximum spare capacity from the South Island is being transferred north through the HVDC Cook Strait link.

The long-range weather forecast is for rain and warmer temperatures in the North Island from Friday and settled weather in the south.

Electricity generator TrustPower said shortened supply could force the spot market price up from the current 3c/kwh to 4c/kwh to 80c/kwh or even as high as $4.

"This weekend we'll be running [generation] very hard. We will make quite a bit of money out of it," said TrustPower's manager of energy purchasing, Therese Thorn.

TransAlta, reliant on gas-fired generation, expects to be paying "quite high prices" over the weekend to supply its retail customers but would not say how much.

Much will depend on final demand and what price Contact will seek if it has to fire up the expensive oil-fired Whirinaki plant.

Contact has scheduled maintenance for its Otahuhu combined cycle station during the shutdown.

Communications manager Bruce Thompson said the company's generating capacity would be reduced by 40 per cent, but it expected those losses to be compensated for by increased prices. It is only the second time there has been a total shutdown of the Maui field since it entered production in 1979.

Shell Petroleum manager Peter Hazledine said there could be an unplanned Maui outage in the future if the valve was not replaced and "that would be much more disruptive if people had no notice."

The three Maui partners and main gas users have discussed ways of minimising gas use during the weekend. It is anticipated the gas left in the Maui pipeline after shutdown will supply light commercial, residential and emergency service users.

Gas production from Kapuni and the other small Taranaki gas fields is being increased.

New Zealand's single biggest gas user, Methanex New Zealand, is shutting down production at its Motunui and Waitara Valley methanol complexes.

Several big industrial users will carry out maintenance during the shutdown and this could also reduce their electricity needs.