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August 2018 NZ O&G wrap

By Neil Ritchie

Methanol manufacturer Methanex Corporation has signed agreements that are expected to supply natural gas to underpin over half of Methanex New Zealand’s production capacity for 11 years through to 2029.

Corporation president John Floren has recently said from the corporation’s Vancouver headquarters that the new agreements will combine with existingcontracts from other natural gas producers to allow the corporation’s New Zealand facilities – two plants at Motunui and one at the Waitara Valley – to continue operatingfor the next 11 years producing up to 2.4 million tonnes of the petrochemical each year.

“Our New Zealand facilities are ideally located to supply the growing Asia Pacific market and these agreements provide a long-term gas supply to underpin a significant portion of our operations,” Floren said.

Ministry of Business, Innovation and Employment officials said – before the Government announced in April an end to new offshore oil and gas exploration permits -- that without new gas discoveries Methanex would be operating at below full capacity from 2021 and could quit New Zealand by 2026.

Methanex has not named the parties participating in the new agreements but industry commentators believe the country’s two biggest private energy players -- Todd Energy and Greymouth Petroleum – are likely participants. Todd Energy now owns all of  the onshore Taranaki Kapuni gas field, which has been operating since 1969 and is still Taranaki’s largest onshore gas field.

And while production so far from the field has been largely from the K3 zone in the Kapuni Formation, it is known Todd is keen on developing the shallower but more complex K1 and K2 sands. It is also known that Todd’s preparations for drilling six new wells (and the hydraulic fracturing of these wells) at the onshore Taranaki Mangahewa field are well underway.

Greymouth continues drilling exploration, workover or development wells at many of its onshore Taranaki fields, including Ngatoro, Kaimiro,Kowhai and Turangi.

And another Todd Corporation subsidiary, Todd Generation, is finally proceeding with a new $100 million gas fired power station that is set to open in mid-2020. 

The Taranaki Regional Council granted resource consents for the 100 megawatt “peaking plant” in 2013, tenders to operate the station were sought in 2015, and now construction is scheduled to begin early next year.

The power station will consist of two 50 megawatt GE gas turbines and is being designed to meet peak electricity demand, as well as providing a base load when wind or hydro generation is low. It is expected to be able to provide electricity more than 70,000 homes. 

Similar peaking plants have already been built in Taranaki – Contact Energy’s one near Stratford and the other (by Todd Energy) near its McKee-Mangahewa production station.

Meanwhile, Malaysia-based Tamarind Resources, which specialises in increasing the economic lives of maturing fields, has contracted a new drilling rig, the Hai Yang Shi You 982, for a multi-well drilling programme likely to start early next year.

It is known that this rig is a high efficiency rig with strong environmental performance. It was built by China Oilfield Services, and is said to be the latest generation of semi-submersible rigs that complies with strict Norwegian standards. This new rig is reportedly a zero-discharge rig, meaning no stormwater run-off or deck drainage goes into the sea without first passing through the rig’s treatment systems.

Last year Tamarind acquired a major stake in the Tui, Amokura and Pateke oil pools that make up the Tui Area field and which have been in production since 2007. Tamarind’s Phase 3 drilling project is part of a wider strategy to prolong the life of the Tui field beyond 2019 utilising the floating production storage and offloading (FPSO) Umuroa that has a storage capacity of 700,000 barrels of oil.

And earlier this year Tamarind applied to the Environmental Protection Authority (EPA) for marine consents to drill up to five development wells, which will be sidetracked from up to four existing wells in the Tui mining licence PMP 38158. And a significant portion of these sidetrack development wells will be drilled horizontally, allowing access to adjacent undrained portions of the oil reservoir s within the Tui mining licence PMP 38158.

 And finally the Taranaki Regional Council has given Todd Energy and Greymouth Petroleum favourable reports for their recent hydraulic fracturing (fraccing) programmes. These included Todd’s fraccing of two wells at its Mangahewa-C wellsite, and Greymouth’s fraccing at its Turangi-C site.