By Gavin Evans
Aug. 2 (BusinessDesk) - Genesis Energy says production from the Kupe gas field it part owns has come off its peak and will likely decline steadily until a new compression project is completed in mid-2021.
Kupe is the country’s fourth-largest gas field and produced about 24.6 petajoules in 2018. Genesis owns 46 percent of the offshore field and buys all its gas for use in its power stations and sales to customers.
The company, also the country’s biggest power and gas retailer, says the decline is in line with reservoir modelling and is the result of record production from the field during the past few years.
“Maximum production is expected to reduce at a rate of between 1.2 percent and 1.5 percent per month until the inlet compression project is completed in mid-winter 2021. The actual rate of decline is likely to vary based on overall production and other factors,” the company said in a statement to NZX.
Genesis shares last traded at $3.41 and have gained about 32 percent this year.
Reduced gas supplies have been a key driver of wholesale electricity prices during the past year. March Otahuhu electricity futures jumped to more than $150 a megawatt-hour earlier this week after OMV said a 14-day outage is planned that month at its offshore Pohokura field, the country’s biggest gas producer.
Genesis noted there has been no change in the estimated reserves at Kupe, which is operated by Adelaide-based Beach Energy and was commissioned in 2009. The field also produced almost 1.1 million barrels of light oil last year and is expected to continue production beyond 2030 if further development work is undertaken.
The partners, including New Zealand Oil & Gas, are due to make a final investment decision on the planned compression project before the end of the year.
Last year, Genesis estimated its likely share of that cost at about $30 million.