Gas halt likely to lift power prices

The New Zealand Herald - - Business -

Pro­duc­tion from the off­shore Po­hokura gas field is to be cut for a third time in a year next month.

OMV, which last month be­came op­er­a­tor of the field from Shell, plans a range of in­ter­ven­tions in the field’s off­shore wells to “re-es­tab­lish” the de­liv­er­abil­ity from those as­sets.

The work means that, for safety rea­sons, pro­duc­tion from the five off­shore wells will be stopped for about 30 days — 12 days in Fe­bru­ary and a fur­ther 18 days dur­ing the rest of the cam­paign.

“We an­tic­i­pate that the on­shore wells will be avail­able to flow dur­ing this cam­paign, with no im­pact on on­shore pro­duc­tion lev­els,” said Gabriel Selis­chi, OMV’s se­nior vi­cepres­i­dent for Aus­trala­sia.

Po­hokura, now owned by OMV and Todd En­ergy, is the coun­try’s big­gest gas pro­ducer. The field, off the coast of Waitara, typ­i­cally de­liv­ers more than 70 peta­joules of gas an­nu­ally from five off­shore wells and three wells drilled from on­shore.

OMV ac­quired Shell’s 48 per cent stake, and its 83.8 per cent in­ter­est in the Maui field, as part of a US$578 mil­lion pur­chase fi­nalised over the Christ­mas-New Year break.

In re­cent years Po­hokura has met about a third of the coun­try’s gas de­mand.

The lat­est shut­down is likely to be bad news for power prices which soared in Oc­to­ber when re­pair work at the field co­in­cided with de­clin­ing South Is­land lake lev­els and other gen­er­a­tion out­ages.

De­spite re­duced de­mand, whole­sale elec­tric­ity prices have re­mained high so far this year due to a com­bi­na­tion of low wind gen­er­a­tion, planned main­te­nance shut­downs, de­clin­ing snow­pack on the South Is­land, and gas sup­ply con­cerns.

Snow stor­age in Merid­ian En­ergy’s Waitaki catch­ment was about 49 per cent be­low av­er­age, the firm es­ti­mated on Jan­uary 12.

Snow­pack is im­por­tant be­cause it be­comes wa­ter for hy­dro-elec­tric gen­er­a­tion when it melts.

Whole­sale elec­tric­ity cost an av­er­age $157.57/MWh in Auck­land in the seven days ended Fri­day, ac­cord­ing to En­ergy Link data.

Selis­chi said the ex­act du­ra­tion and tim­ing of the off­shore shut­down pe­ri­ods will be sub­ject to op­er­a­tional re­quire­ments and the weather.

Po­hokura is the coun­try’s big­gest gas pro­ducer and in re­cent years has met around a third of to­tal de­mand.

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