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UPDATE: Greater transparency sought in gas sector

UPDATE: Greater transparency sought in gas sector

(Adds resumption of Pohokura production, Shell comment, from fifth paragraph.)

By Gavin Evans

Dec. 11 (BusinessDesk) - The government is reviewing information disclosure requirements in the gas industry following the extended shutdown of part of the Pohokura field.

Offshore production from the field, the country’s biggest gas producer, has been halted twice this year for months because repairs were needed.

Major industrial users have complained of the lack of notice they received from their gas suppliers and field operator Shell. The power sector was also roiled by the shutdowns.

The second outage, in late September, coincided with low hydro lake levels and then with planned generation maintenance. That combination saw wholesale power prices soar in October and November, with Dunedin-based power retailer Payless Energy ceasing trading as a result.

Gas and condensate flows from Pohokura resumed mid-morning, Shell said today.

Industry co-regulator, the Gas Industry Company, plans to issue a discussion paper early next year on whether additional disclosure arrangements are needed.

In correspondence with Energy and Resources Minister Megan Woods, the GIC says good information is important for efficient operation of the gas market and informed decision-making by participants.

“We agree that it appears that information disclosure in the sector could be improved, although this may not be without commercial and cost implications for some parties,” GIC chief executive Andrew Knight said in an August letter to Woods.

“If we consider that information disclosure is not sufficient we will determine whether industry-led arrangements to improve disclosure are possible or whether regulation is required.”

Pohokura is owned by Shell, OMV and Todd Energy. It typically delivers more than 70 PJ of gas annually from five offshore wells and three wells drilled from onshore.

Production from the offshore wells was halted in late September when a fault was discovered with the main shutoff valve on the production platform off the Taranaki coast.

The venture also opted to replace a 720-metre section of the offshore pipeline and expected to complete the work by the end of November at the earliest.

Shell Taranaki general manager Iwan Bridge said the pipeline was brought back into service Monday evening and gas and condensate flows resumed mid-morning today.

Woods had written to the GIC in July – following the earlier outage at Pohokura – concerned at the “often limited” reporting around scheduled production outages and the impact that could have on the gas market.

She asked the GIC to report back on the disclosure issue, ideally before September, so that its views could feed into work the Ministry of Business, Innovation and Employment is doing on possible changes to the 1992 Gas Act.

That MBIE review will likely include other topical issues, such as how to cater for greater potential use of hydrogen in the sector. It is also expected to get underway early next year.


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