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When liquefied natural gas, or LNG as it is more commonly known, is cooled to a certain temperature its volume shrinks by 600 percent, making it ideal for sea transportation and storage compared to compressed natural gas (CNG). With domestic gas supplies at risk, NEIL RITCHIE looks at preparations towards importing LNG.
Gas-fired power stations will have an increasing role to play in the country’s power generation, backing up electricity generated from the inherently changeable renewable sources such as hydro and wind. Natural gas is also the cleanest fossil fuel and the fuel of choice around the world for fossil-powered generation. While Maui field owners Shell, Todd Energy and Austrian firm OMV, now believe they can continue producing Maui gas until at least 2014; it is at greatly reduced rates compared to the production achieved between the mid-1980s and the early 2000s. New Zealand will definitely need further supplies of natural gas for the foreseeable future, whether through more discoveries or imported LNG, says veteran energy industry analyst Chris Stone. “Pohokura and Kupe will keep the market supplied, just, but we need more of them,” says the Rockpoint Corporate Finance executive director, referring to the virtually completed $1 billion Pohokura project off north Taranaki and the part-finished (70 percent) $1.1 billion Kupe development further south. Interests already preparing for LNG importation include Gasbridge, a company jointly owned by the country’s two leading gas users, Contact Energy and Genesis Energy. The pair formed Gasbridge several years ago as a “prudent backstop”, should explorers not find enough new domestic gas to replace existing supplies. Having now investigated the economics of importing LNG, the company believes it to be very feasible, with Australia and Indonesia the most likely sources of the highly compressed gas. Gasbridge has already chosen New Plymouth’s Port Taranaki, ahead of Marsden Port near Whangarei, as the preferred port for any LNG importation and re-gasification project. The company commissioned a wide range of studies into the likely affects of such an LNG facility. Although not yet finished, the work is demonstrating the LNG proposal will not adversely affect the environment or people living nearby. Studies have covered national and regional economic implications, marine environment, visual and landscape effects, evaluation of safety, cultural, archeological, traffic, noise and construction effects, and even the effect on surf breaks off New Plymouth beaches. This year Gasbridge is seeking the necessary resource consents to build an LNG gas importation terminal at the New Plymouth port which, if the full $600 million scheme goes ahead, will require a peak labour workforce of up to about 300 during its four years of construction. If the project goes ahead, LNG tankers will use a specially built berth at the port and offloaded gas will carried by a trestle-mounted pipeline along the outside of the port’s main breakwater to storage tanks behind Contact’s now mothballed New Plymouth power station. The re-gasification plant at the port will use seawater as its heat source and re-gasified LNG will be transported into the North Island high-pressure network using the existing pipeline spur from the nearby Maui pipeline into the power station. The Contact and Genesis scheme proposes LNG tankers calling at Port Taranaki every month or so, bringing about four petajoules (PJ) of gas at a time, and supplying about 30 percent of the 180PJ or so of gas used inNew Zealand each year. Most LNG will be for Contact’s present and planned gas-fired power stations in Taranaki and Auckland. Genesis may use some at its planned Rodney station, north of Auckland, though it also has rights to gas from the 254PJ Kupe field from mid-2009. There is also industry talk of a smaller, less costly LNG project, with Contact’s proposed development of the central Taranaki Ahuroa gas field pivotal to the revised scheme. In early April, Contact development and acquisitions manager, Liz Kelly, gave a presentation to investors at Queenstown on the development of Ahuroa as the country’s first underground gas storage facility. The presentation illustrated Contact plans to spend about $150 million over the next two years developing Ahuroa. Contact will use such a facility to store gas it cannot readily use but is obliged to take and pay for under the strict take-or-pay conditions of new gas field developments, such as Pohokura. Contact’s presentation also indicates a wide range of possible applications, including using Ahuroa to store imported gas, be it LNG or CNG, making such imports more feasible, as the cost of constructing and placement of storage tanks is a significant part of any LNG importation scheme. Having gas storage facilities at Ahuroa will bring cost savings as imported gas, once re-gasified, can be fed into existing pipelines for direct transportation to Ahuroa and re-injection for later use. Contact envisages storage volumes of about 10-15PJ of gas at Ahuroa, with initial injectible rates of around 170 terajoules per day. While new domestic gas contracts might be constrictive, Contact’s presentation warns that LNG importation contracts may be more so, locking in prices and quantities of gas to be delivered. It is understood Contact may not want to be tied to such restrictive long-term LNG contracts and prefers the flexibility of buying LNG on the world spot market, with imports arriving as, and when, required at Port Taranaki and being stored at Ahuroa, along with any un-wanted domestic gas. The transportable gasLNG is natural gas that is cooled to approximately -160 degrees centigrade at normal atmospheric pressure. It is colourless, odourless and non-toxic, with less than half the density of water. When cooled to such low temperatures, natural gas shrinks by about 600 times its original volume, enabling far more to be shipped as LNG by sea tanker than would be possible if the gas was simply compressed natural gas (CNG). It is stored in specially insulated, low temperature tanks and transported in purpose-built, double-hulled sea tankers at atmospheric pressure. Once an LNG tanker arrives at a re-gasification terminal, the LNG is pumped from the carrier to storage tanks and is returned to its original gaseous state by pumping it from the storage tanks and warming it in vapourisers for later delivery into gas pipeline systems.
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Energy leaders first raised the prospect of importing LNG earlier this decade after news that gas supplies from the Maui offshore Taranaki field might have run out by mid-last year, almost two and a half years earlier than the contracted end of 2009.