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Redetermination of Maui gas reserves

Redetermination of Maui gas reserves

The Crown has received the final redetermination of gas reserves from the Independent Expert carrying out the review of the Maui field. The Independent Expert was appointed under the Arbitration Act after parties to the Maui Contract were unable to agree on the remaining reserves.

The Independent Expert has confirmed that the Maui reserves are lower than originally estimated. He has concluded that total reserves are 3562PJ. This compares to November 2001 estimates of approximately 3800PJ. Taking into account total usage to date, this means that from 1 January 2003, approximately 370PJ of Maui gas will be economically recoverable at the Maui contract price.

The parties to the Maui contract will now settle on a lower rate of off-take for the field to make the best use of remaining reserves. The reserves will be allocated across the remaining time until the Maui Contract expires in 2009.

“Over the next five years, New Zealand faces a fundamental transition in our energy supply,” Minister Pete Hodgson said. “We have enjoyed over 20 years of cheap, bountiful Maui gas, and that era is now drawing to a close.”

As off-take from Maui decreases, gas production will shift to multiple smaller fields. The largest of these, Pohokura, is currently expected to begin production in early 2006, but fields such as Kapuni, TAWN, McKee, Mangahewa, Rimu and Kupe are also likely to play important roles.

Preliminary Ministry of Economic Development analysis shows that for the next few years some existing thermal stations may switch to coal or oil as a fuel source. This is because Maui is running down earlier than originally anticipated.

However, for most of the next two decades, recent work by the Ministry of Economic Development shows renewables like wind, geothermal, hydro, and forestry biomass are likely to be the most cost-effective source for new generation.

“It’s also important to remember that New Zealand wastes at least 20% of the electricity that is generated, through inefficient lighting, heating, appliances and industrial processes. The Government’s National Energy Efficiency and Conservation strategy is about capturing some of that wasted energy, at a profit to homes and businesses, and at a much lower cost to the economy than building new generation.”

The Minister of Energy has instructed government officials to incorporate the Maui figure into their detailed energy modelling, and provide an update within a week on future projections for gas and electricity supply and pricing, and new generation. The Minister will brief the media on these detailed projections once the analysis is complete.

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