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Kupe flows at last, as Kapuni starts to wind down

Kupe flows at last, as Kapuni starts to wind down

by Pattrick Smellie

Commercial oil and gas have flowed for the first time from the Kupe gas field today, 23 years after the field was first discovered.

New Zealand Oil & Gas Ltd announced the commissioning of the plant to process the approximately 254 petajoules of natural gas, 1.1 million tonnes of LPG and 14.7 million barrels of light oil believed to be contained in the Kupe field.


The announcement came as Shell New Zealand and the Todd Petroleum Company notified Vector that it wished now to redetermine the size of the onshore Kapuni field, now that the majority of gas from the field has been exhausted. Vector has rights to 50% of the remaining gas take from Kapuni under an agreement dating from April 1997.


The parties will meet on the issue on February 3 next year.


Kupe is 50%-owned by ASX-listed Origin Energy, and 30% by Genesis Energy, to which Kupe is heavily contracted. Origin's arrangements with Genesis pre-date its becoming a 51.4% shareholder in NZX-listed Contact Energy.


The first gas and liquids from the field first found in 1986 are being piped ashore from the offshore Kupe field to a processing plant near Hawera.


The Kupe field, 30km off the south Taranaki coast, was discovered by NZOG in 1986.


"During the era of cheap Maui gas and low oil prices it was uneconomic to develop Kupe," said NZOG chief executive David Salisbury in a statement to the NZX.

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An investment decision was made in 2006, with Origin Energy as operator.The other joint venture parties is Mitsui (4%).


With the raw gas stream now flowing to shore, the Kupe production system is being bedded down through a commissioning period, the company said.


"There will be production of sales gas, LPG and light oil during the commission period with full steady state production expected to be achieved in the next couple of months," said Salisbury.


Kupe will supply 10 to 15 per cent of New Zealand’s annual gas demand and around half of the country’s LPG requirements.


Vector’s entitlements in the Kapuni field related to 1,010PJ of available gas agreed under a contract redetermination in 1997. Vector has rights to take 50% of the remaining reserves as at 1 April 1997. The majority of this gas has already been taken so the redetermination will decide how much gas is left to take.

Vector has engaged an international expert to advise Vector on the ORGR of the Kapuni field from the data made available. "Vector expects that there will be no impact on the availability of gas to customers under their existing contractual arrangements with the company," the company said in a statement to the NZX. "Given the need for Vector and its experts to fully consider and evaluate the information received from the KMCs, Vector is not able at this stage to quantify the reserves position and the financial impact."\ The share prices of both companies barely moved on today's news.

(BusinessWire) 18:32:59

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