Energy answer is blowin' in the wind

By JOHN BLAKELEY*

About 1.30pm last Wednesday, an unplanned shutdown of the Maui gasfield in Taranaki occurred because two generators on the main offshore platform failed while a third generator was out for maintenance.

The effect was to remove fuel supplies from electricity-generating stations operating on natural gas and responsible for about a quarter of the country's electricity supply.

A rapid response to this emergency over the next five hours during the evening peak demand saved the North Island from power cuts.

Hydro-electric stations were able to increase their output, the Huntly power station switched from gas to operating entirely on coal and returned a third generating unit to service, and two major industrial users slashed production voluntarily as electricity spot prices soared.

By 9pm the crisis was over. The gas supply was restored, and by then the evening peak demand was well over.

The operators of the electricity grid would have been able to breathe a sigh of relief and feel pleased that this emergency situation had been well handled.

But the incident gave a timely warning of the situation New Zealand will face if the Maui gasfield, which has been one of our main energy sources for the past 30 years and provides about 80 per cent of our supplies of natural gas, runs out in 2006 or 2007 before replacement sources are fully developed.



Commenting on the incident, a spokesman for Energy Minister Pete Hodgson said he was confident enough smaller gasfields would be delivering fuel by the time Maui wound up.

But the position is much more serious than that.

Shell, the largest shareholder in Maui, warned 15 months ago that the field might run out about mid-2007.

This was confirmed by an independent report issued last Friday.

The Government's response has been to propose invoking a clause in the original Maui contract - signed with the Crown more than 20 years ago - to reduce the gas supply, extending the life of the field up to the end of the contract period in 2009.

The owners of the field are likely to strongly oppose this move.

It will also have a severe impact on the Methanex methanol plant in Taranaki, which has a supply contract due to end in 2005, and will cause greater concerns over security of electricity supply, especially in a dry winter.

The only new field which is economic to develop at anything like current gas prices is Pohokura, near the Waitara coast in Taranaki.

On January 30, its owners said further drilling indicated resources were about 45 per cent less than the initial estimate, and they were unlikely to commit finally to the development of the field until they had a clearer picture of reserves.

The energy industry has been pinning its hopes on Pohokura to partly replace Maui. It will probably take about three years from a commitment to develop until the gas is available, so we are now moving rapidly to a situation where there may not be an overlap between Maui running out and Pohokura being available.

Electricity-generating companies are already looking at alternatives. New coal-fired power stations are being proposed and the Huntly power station can run continuously on coal.

Contact Energy is seeking resource consents allowing it to run three units at the New Plymouth power station on oil.

Present consents allow Contact to do this only if there is an emergency failure of the Maui field.

The company has been upgrading disused oil tanks and burners to enable it to swap between oil and gas at the flick of a switch. It is likely that in dry years from now on, the New Plymouth units will be running on oil whenever the spot price of electricity makes it economic to do so.

I would suggest that if Maui goes into short supply in 2006 or 2007 and Pohokura is not fully developed, our electricity-generation system will be propped up by Huntly running flat out on coal, New Plymouth on oil, plus the possibility of a new coal-fired power station if a decision were made almost immediately to proceed with such a station.

All these actions would be completely contrary to the Government's commitment to limit greenhouse gas emissions under the Kyoto Protocol.

The root cause of the developing problem is that for the past 15 years, since the Ministry of Energy was abolished, successive Governments seem to have had a non-policy on energy.

We have continued to have a Minister of Energy but no ministry because energy supply has been regarded as being like any other commodity, rather than a vital national service.

The flaws in having a non-policy are now becoming evident, with electricity shortages looming in three to four years and the likelihood of considerably increased greenhouse gas emissions from electricity generation.

Either Huntly on coal or New Plymouth on oil will produce more than twice as much carbon dioxide per unit of electricity produced as a modern combined-cycle power station running on natural gas.

A totally market-based approach to energy is quite inadequate if the Government is to accept the responsibility of taking the country into international climate change agreements.

Germany is an example of what could be achieved if once again this country had an energy policy.

Last year, more than 3000MW of new wind-power generation capacity was installed there, bringing the total wind-power capacity to 12,000MW.

Even allowing for the fact that wind turbines may operate at near capacity for only 40 to 45 per cent of the time, these are very impressive figures when it is considered that NZ's annual increase in required electricity generation capacity is 150MW and we have a total installed generating capacity of around 8000MW.

Furthermore, wind energy has the distinct advantage that it can be built up in small increments, and in a very short time - generally less than two years.

Last October, the Government said a national renewable energy strategy would aim for an extra 30 petajoules of renewable energy annually by 2012. This was 30 times the electricity used annually by a city the size of Nelson.

But until the Government develops an energy policy, the chances of achieving the aim of this strategy are nil.

If New Zealand is to protect its future security of electricity supply and honour its commitment to the Kyoto Protocol, it must move quickly away from a mindset of building more thermal power stations and towards a renewable energy future.

* John Blakeley, a research fellow at the Unitec institute of technology in Mt Albert, is convener of the Sustainable Energy Forum.