Liquefied natural gas imports feasible within 3-4 years but would be costly
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The import of liquefied natural gas (LNG) is feasible within the next three or four years, but would be costly, might be needed only occasionally, and would likely need backing from the government for fast track consent.
A report commissioned by the gas company Clarus and the four main power companies - Contact, Meridian, Genesis, and Mercury - has just been released and canvasses various options of scale.
LNG has been touted as a back-up for dwindling local gas supplies for the power industry.
Clarus chief executive Paul Goodeve said the report was a starting point looking at either a small scale import facility, or larger international standard installation.
"This work aims to provide New Zealand with a robust and clear-eyed evaluation of LNG import feasibility, and while both options are technically feasible, they each come with very different costs and benefits."
A small scale import option would use smaller vessels, likely needing frequent shipments, but using existing port facilities and infrastructure, at a cost of between $140m-$295m.
Goodeve said that had the benefit of lower build costs, faster and flexible development, but the cost of gas would be about 25 percent higher.
A conventional LNG import option would be based on using standard-sized ships delivering significant volumes of gas, which may vary between none in some periods and a handful when gas was required for power generation.
"The real benefit of these conventional-scale LNG solutions is to improve security of energy supply, providing access to energy when required. In New Zealand's case, this may be in a dry-year when hydro inflows are low, or if domestic gas supply continues to decline," the report said.
The report said the government would not need to be directly involved in any LNG operation but could materially assist through backing the consenting of a project.
"It has an important role to play at this early stage in defining the project. Without government engagement the schedule to first LNG imports will certainly slip; with government intervention and pro-activity the schedule to LNG can be accelerated."
The government has given an indication that it would, if necessary, legislate fast track consent for an LNG terminal.
The report mentioned, but did not identify, six possible import locations, although the small scale option singles out Port Taranaki.
The fuel import port at Marsden Point has been mentioned in the past, and the other four established port operations - Auckland, Tauranga, Napier and Wellington - are logical sites given they already handle fuel shipments and connect to the North Island gas network.
Goodeve said the import of LNG was not a substitute for the development of biofuels, gas exploration, and electrification through renewable energy generation.
"Our energy future will be shaped by a mix of energy options and this work ensures the option of LNG is properly understood."
He said there was much engineering, commercial and planning work to be done, which meant decisions on whether to proceed would not emerge until next year.
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