Kupe Gas Development Project, Taranaki, New Zealand

The Kupe project is to be the first phase development of gas field discoveries first made by New Zealand Oil and Gas (NZOG) in 1986. The project was given the final go ahead to move into the construction phase in July 2006. However, a large amount of design, assessment and pre-development work preceded this decision.

The Kupe project gas reserves are expected to be online by mid-2009 and producing 20 penta joules of commercial sales gas.

This quantity of gas is 15% of New Zealand's current annual requirement. The project will also produce 1.7 million barrels of condensate per year and 90,000t of LPG per year.

Reserves are estimated at 389 penta joules of gas, approximating to the reserve lasting for around 20 years.

Previously the Kupe field had been thought of as uneconomic to develop but the greater demand for gas for electricity generation and the depletion of the Maui field (New Zealand's major source of gas for the last 25 years) has meant that the project was resurrected. The field lies in 35m of water, 30km offshore, south of Taranaki Peninsula.

JOINT VENTURE AND FINANCE

The development budget for the project has been estimated at NZ$980m (US$594m) (NZOG share is NZ$147m and Genesis Energy NZ$20m). Participants in the Kupe development (Kupe joint venture) are: Origin Energy (via subsidiaries) Operator 50%, Genesis Energy (via subsidiaries) 31%, New Zealand Oil & Gas Limited (via wholly owned subsidiaries) 15% and Mitsui E&P New Zealand Limited 4%.

The participants in the Kupe project announced in October 2005 that the development budget would be higher than anticipated. The higher costs have been offset by a renegotiated gas supply contract with Genesis Energy and higher worldwide prices for condensate and LPG have meant that the project is proceeding with the full confidence of all the participants.

Genesis Energy is a major New Zealand electricity supplier and will receive all the produced gas because they need long-term supplies for their new e3p power-generation project in New Zealand. There will be a sales gas line to Kapuni from the processing facility.

CONSTRUCTION

Technip has been appointed as the construction manager for the project, through an alliance contracting arrangement (joint implementation team) with Origin Energy. Origin Energy has also awarded the construction contract for the onshore and offshore portions of the project to Technip Oceania Pty Ltd.

Technip is to be responsible for the construction of the onshore processing facility and the remaining onshore infrastructure.

The Kupe project has already seen the design of the new onshore production station by Maunsell to process the offshore gas and this will be constructed by Technip 12km west of Hawera starting in September 2006.

The rest of the project will comprise: an unmanned offshore platform constructed above the Kupe field production wells and supporting up to six wellheads; a horizontal directionally drilled shore-crossing, bored under the coastline cliffs, connecting the offshore pipelines from the platform to the production station (30km of pipeline) and a network of onshore pipelines.

Construction is expected to commence in Taranaki in September 2006. One of the first actions of the project will be the drilling of three horizontal development wells with the ENSCO 107 jackup rig. The first development well is scheduled to be spudded in the first half of 2007.

Click here for printable version