Mr Tizard wants to use gas for power generation

Press, 10 February 1986, Page 5

Mr Tizard wants to use gas for power generation

PA Wellington The best possible use for the remaining uncommitted Maui gas would be for electricity generation, said the Minister of Energy, Mr Tizard. A Cabinet committee will discuss options for using the gas, and public opinion on its use as reflected in submissions to the Energy Advisory Committee.

Most of the public submissions received favoured leaving the gas in the ground as a reserve for the future. Mr Tizard said he has made no secret of the Ministry of Energy’s opinion that the best commercial use for the gas would be to use it for electricity generation. However, he said the environmental advantages of using the gas also needed to be emphasised to the public. “First, it will reduce the amount of coal burnt for electricty generation and this is, in itself, an environmental ‘plus’. “Gas is, of course, a cleaner-burning fuel than coal. The real advantage of allocating gas to electricity generation will be that it will also reduce the pressure on developing our coal reserves for electricity generation. , "The slower build-up of coal demand will allow a more orderly approach to coal mining, which will also minimise any environmental damage that

may be caused by this activity. “Allocating the gas for electricity generation will also enable us to consider further South Island hydro development and give more breathing space for geothermal resources to be developed as an alternative source of electricity generation,” Mr Tizard said. More gas for electricity could also enable the now-mothballed Marsden B power station near Whangarei to be put to use, thus reducing the projected need for more transmission lines through the Auckland region to meet anticipated power demand.

While another pipeline would have to be built through or around the Auckland isthmus to supply sufficient gas to the Marsden B and possibly Marsden A power stations, a well planned pipeline would have few, if any, lasting environmental consequences, Mr Tiaard said. It was essential that the Marsden B oil-fired power station was brought into productive use. The possibility of the Marsden A power station being converted to gas was also being investigated. "There will, of course, be added advantages from having a new pipeline north,” Mr Tizard said.

“New industries have already been in contact with the Oil and Gas Divi-

sion of the Ministry of Energy, looking at the possibility of obtaining bulk gas supplies in the Auckland and Northland regions. “The Marsden Point refinery is also interested in using gas as refinery fuel and if it did so, this would make more L.P.G. available for other purposes.” Mr Tizard said the Government’s decision on the Maui gas allocation would have big implications for coalmining. As well as taking the pressure off new coal, hydro, geothermal and Cook Strait cable developments, allocating the gas to electricity generation would allow more flexible use of the gas resource than dedicating It for export as L.N.G., or leaving it in the ground. Some gas could also be available for an exportbased development project, such as an ammonia plant for the Taranaki region, or for increased L.P.G., production or the possibility of more petrol being produced from the synthetic petrol plant. In any case, there were ample reserves left for very substantial further growth in gas reticulation. “This growth is such that it is estimated that New Zealand reticulated gas demand will have doubled within 20 years,” Mr Tizard said.

“C.N.G. has played a major role here and I am expecting demand for C.N.G. to grow steadily.

More growth is also expected for L.P.G.”

Mr Tizard said it was not commonly realised the Government had to pay for the gas whether it used it or not, under the terms of the "take or pay” agreement negotiated with Shell/BP/Todd. If the Government did not take the gas allocated to it by 2008, the gas would then belong to the Maui partner. They would decide who got it then, and at what price. “It is important for the public to realise that there are physical and, contractual limitations attached to the use of Maui gas.

“After 2008, the Maui partners may well be unwilling or even unable to supply gas according to a long, drawn-out depletion profile,” Mr Tizard said.

“If, as is quite likely, there is still a sizeable reserve remaining in the Maui gas field, the Maui partners ’will be more attracted to the economics of a large, new base-load industry.

“In these circumstances it would he difficult for the Government of the day, according to the contract, to force them to act in a manner not in the economic interests of the owners of the gas.”

Mr Tizard said some people had criticised the possible use of the gas for electricity generation as an inefficient use of the resource.