Land works for Kupe project approved

Natural gas supplies from the Kupe offshore field have come a step closer to market with resource consent for the $400 million project approved by the Taranaki Regional Council.

The Kupe Joint Venture plans to extract natural gas, LPG and light oil from the field, which is about 30km off the Taranaki coastline.

Kupe was discovered by New Zealand Oil & Gas (NZOG) when it drilled an exploration well in 1986, but cheap natural gas from the huge Maui field made it uneconomic to develop Kupe until now.

A declining Maui field and the looming shortage of natural gas have prompted a surge in exploration and drilling for new fields, with Kupe and Pohokura the first to come on stream.

The council has given resource consent for all the work needed for the Kupe project on land. Gas from the field will come ashore and be piped into the existing gas treatment plant at Kapuni, owned by NGC. Light oil and LPG will be trucked from a new onshore production station.

Conservation Minister Chris Carter now has the job of approving or declining permission for the work needed to build and operate a pipeline on the seafloor.

Parties involved in the process have 15 working days in which they can appeal against the council's decision to the Environment Court.

Australian company Origin Energy is the 50 per cent owner of the joint venture. State-owned enterprise Genesis Power owns 31 per cent, NZOG owns 15 per cent and Mitsui E&P New Zealand has the remaining 4 per cent.

Genesis has joined the exploration market to secure gas supplies for its power stations, such as the new one it is building at Huntly.

A lack of guaranteed gas supplies forced the Government to give Genesis a controversial underwriting, enabling it to get financial backing for the station. The Government says it is unlikely it will ever need to pay out under the underwriting.

Contact Energy, which has a similar station at Otahuhu, has joined forces with Genesis to investigate importing liquefied natural gas (LNG) to burn in power stations.

Although much more expensive than locally produced gas, it can be bought on the world market.

Many in the energy sector have pointed to a lack of secure gas supplies as the biggest problem facing New Zealand.