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TCC refurbishment greenlit

By Neil Ritchie

Contact Energy, the country's second biggest electricity generator, and a major power retailer, has finally confirmed it is going ahead with a $NZ50 million refurbishment of its ageing Taranaki Combined Cycle (TCC) gas-fired power station at Stratford – something the company has been contemplating for several years.

The TCC plant, commissioned in 1998, is capable of generating about 360MW of electricity but has run only intermittently for the past few years as Contact makes more use of electricity generated from cheaper renewable sources such as hydro lakes and geothermal fields.

However, this year’s winter saw 80-year low inflows into Contact's key South Island hydro lakes, limiting the company’s ability to run these generation assets. This may have influenced its decision to proceed with the TCC overhaul.

Contact also has two newer nearby gas-fired peaker plants, each capable of producing 200MW and commissioned in 2011, that can be fired up more quickly than the TCC station, providing better back-up in times of peak electricity demand, particularly during winter mornings and evenings.

It will be TCC’s fifth refurbishment, which will see it able to continue providing back-up electricity through to 2022. And the planned upgrade will provide a short, sharp boost to the Taranaki engineering industry.

Work is expected to start in early November and continue until early to mid-December, with the TCC “outage” being up to 40 days. It will be a sizeable operation, with a peak work force of about 300 contractors and 40 Contact employees, boosting the Taranaki economy, particularly in the Stratford district.

There will be some turbine blade replacements and refurbishments, as well as a broad range of inspections, plus some additional work if necessary, done on the balance of plant equipment to support the continued reliability of the TCC unit. The overhaul will add another 25,000 hours of operating life to the plant.

In addition, there will be some positive flow-on effects, such as more work for New Zealand Energy Corp and joint partner L&M Energy through operating Contact Energy’s nearby Ahuroa gas storage unit, as the TCC power station needs “dry gas” on which to operate, compared to “wet gas”, containing higher hydrocarbons, that flows naturally from gas fields.

Meanwhile, Canadian listed junior TAG Oil continues its largely successful, though rather subdued, exploration and development programme in onshore Taranaki.

Commenting on the quarterly results to June 30, 2017, TAG said it had drilled and successfully flow tested the Cheal-E8 exploration well in the Cheal East licence PEP54877. The well is now tied-in to existing infrastructure as a permanent producer, currently pumping 75 barrels of oil equivalent per day (boepd). TAG operates the permit with a 70 percent interest, while fellow listed Canadian junior East West Petroleum holds a 30 percent stake.

TAG also said there was a complete Cheal plant and pipeline shutdown for eight days during April, which largely accounted for average net daily oil production decreasing from 964 barrels per day (bpd) for the March quarter to 895 bpd during the June quarter.

However, average net daily gas production increased from 1.5 million cubic feet per day (MMcfpd) to 1.6 MMcfpd primarily due to the additional gas production from the Cheal-E8 well from late May and additional gas at the Sidewinder-2, 5 and 6 wells.

Initial results of testing operations at the Cheal-D1 gas-condensate (light oil) exploration well in the Cheal East permit are expected by the end of August after drilling to a total measured depth of 2400 metres and perforating an 18-metre section of high quality sands in the Urenui Formation. TAG and East West hope to commercialise Cheal-D1 and tie the well into the Cheal production facilities, while TAG alone expects to tie-in the nearby Cardiff-2 well, in mining licence PMP 38156, to the Cheal production facilities by the end of September.

As well, TAG and Aussie listed minnow Melbana Energy plan to drill the onshore Pukatea-1 well, within the Puka licence PEP 51153, before the end of 2017.

On the financial front, TAG remains fairly healthy, with $C12.2 million in cash and cash equivalents, as well as $C15.2 million in working capital.

And, finally, fellow listed Canadian junior New Zealand Energy Corp recently announced the results of its 2017 annual general meeting where company shareholders re-elected the trio of current directors – chairman James Willis, Mark Dunphy and David Llewellyn – who will continue as directors until the 2018 annual general meeting or until successors are elected or appointed.