Oil and gas in New Zealand is produced from 21 petroleum licences and permits, all of which are in the Taranaki Basin, located both on and offshore the North Island. According to the Gas Association of New Zealand, the country has over 3,400 km of high pressure gas transmission pipelines covering the North Island. Connected to these are more than 11,600 km of intermediate, medium, and low-pressure gas distribution pipeline networks.

All the North Island high pressure gas transmission pipelines are owned and operated by Vector, with the exception of the 307 km Maui Pipeline, owned by Maui Development Limited and operated by Vector. From the transmission lines, natural gas enters distributed networks owned by operators such as Nova Gas, Powerco, Vector Energy and GasNet.

As the main pipeline owner and operator, Vector is responsible for the operation of high pressure transmission gas pipelines throughout New Zealand’s North Island. These pipelines transport natural gas or petroleum products to over 200,000 industrial, commercial and domestic gas consumers.

In the past five years, the New Zealand energy industry has begun to search for new ways to secure its domestic energy supply, as oil and gas reserves in the Taranaki Basin have begun to decline. These options have included opening up more gas exploration permits and a proposed LNG import terminal in Port Taranaki.

The proposed LNG project, which involved the construction of an LNG import terminal with gas to be piped to the New Plymouth Power Station, was put on hold late last year. The companies involved, Genesis Energy and Contact Energy, believed that they would not need to import gas until mid to late next decade.

It was also agreed that the partners preferred the production of domestic natural gas to power New Zealand. This coincided with the commencement of operations of Origin Energy’s Kupe Gas Field Development.

Kupe Gas Field Development

The Kupe Gas Project, located in the offshore Taranaki Basin, was completed early this year. The project is a joint venture between Origin Energy Resources Kupe Limited, New Zealand Oil and Gas, Genesis Energy and Mitsui E&P Australia.

New Zealand Oil and Gas discovered the Kupe field in 1986 during exploratory drilling 30 km off the south Taranaki coast. A decision to invest in the gas field was not made until 20 years later, in June 2006. Construction commenced soon after in November 2006.

The initial development consists of a 30 km pipeline to shore, three wellheads, an offshore platform, an onshore production station near Hawera and oil storage facilities in New Plymouth. The pipeline fabrication and installation contract was awarded to McConnell Dowell, and Technip’s Apache pipelay vessel was used to install the pipeline. DrillTec completed horizontal directional drilling works from the onshore gas plant to a point approximately 2,200 m offshore.

The onshore production station, located 12 km west of Hawera, processes the raw gas to meet the specification for the main North Island gas transmission system and separates out the light oil/condensate and LPG. The condensate is transported to Port Taranaki (New Plymouth) for export to Australia and the South Pacific, while the LPG is sold into the domestic New Zealand market.

All processed natural gas has been contracted to Genesis Energy for domestic electricity generation at the Huntly Power Station, located south of Auckland. The thermal power station has a present output of 1,448 MW and is New Zealand’s largest thermal power station, providing up to 20 per cent of the country’s electricity. Gas is piped to the station from the Taranaki region.

Current production at the Kupe field is approximately 70 TJ/d of gas – enough to power at least 300,000 average homes over a year – 300 t/d of LPG and 7,500 bbl/d of light crude.

Vector pipeline expansions

Vector has said that more investment on its pipeline capacity is necessary to support the growth of industry, particularly around Auckland.

North Pipeline expansion

Vector has received approval to supply just over 77 TJ/d reserved gas capacity from 1 October 2010 onwards its North Pipeline, four per cent more capacity than was available in 2008–09. This includes up to 62 TJ/d north of Rotowaro. The North Pipeline makes up part of Vector’s transmission network, running from the Rotowaro Compressor Station near Huntly to a delivery point in Kauri, north of Whangerei.

In order to work towards providing this increased capacity to shippers, Vector is investigating the expansion of the pipeline through three options:

* Loop some or all of the exiting 350 mm Rotowaro – Smales Rd Pipeline (two looping sections, up to 83 km); * Additional pipeline compression downstream of Rotowaro; and, * Some combination of looping and compression.

There are two options for looping. The first would be a partial looping of between 18 km and 62 km between Rotowaro and Papakura East, plus 21 km between Papakura East and Smales Road section, which would create 22–32 TJ/d capacity up to Auckland, and would cost $NZ80–120 million (approximately $A61–92 million).

The second option is full looping of 83 km between Rotowaro and Smales Rd, which would create 140–160 TJ/d capacity and would cost $NZ150–200 million (approximately $A115– 153 million). Both options costs include an upgrade of the Rotowaro Compressor Station.

In regard to increasing capacity by compression, Vector has said that Southdown would be the logical site for additional compression, as the adjoining 200 mm pipeline running through Auckland starts at this point, and the biggest offtakes are upstream of the area, reducing the flow to be compressed.

Auckland to Southdown Power Station link

Vector recently completed a major pipeline upgrade of the South Auckland transmission system, which enabled the connection of the Westfield delivery point to the Southdown Power Station delivery point in Penrose.

This project consisted of a 350 mm diameter, 1.6 km long pipeline to reinforce the high pressure gas transmission system to meet an increasing demand for gas from commercial and industrial sectors.

Construction started in May and ended in October 2009, mainly using traditional open cut trenching to accommodate the varying rock and soil mix encountered along the route. Approximately 40 per cent of the route was constructed within road reserves, while the rest ran through privately owned-land. The project involved horizontal directional drilling through basalt lava under a railway crossing.

Vector said that one of the most demanding features of the project was the need to install the new pipeline within the same easement as an existing high pressure gas transmission pipeline. This required daily stand-over supervision to ensure that the contractors engaged were continually aware of the position of the existing live pipeline.

Waikohu realignment

Vector has also been involved in the realignment of the Kawerau – Gisborne Pipeline, which was originally installed in 1984 and operates at approximately 7 MPa.

The pipeline crossed the Waikohu River at Te Karaka, north of Gisborne. and was originally laid in a trench cut into the cliff face. Over time the action of wind, rain and occasional flood waters caused the cliff face to recede, exposing the pipeline, which then needed to be realigned.

A detailed geotechnical assessment was carried out to establish the suitability of the ground for utilising the horizontal directional drilling method for pipe installation. Following planning approval, the pipeline realignment was carried out in early 2009 and the old pipeline section was removed.

Onehunga-SH20 realignment

Transit New Zealand is widening the South Western Motorway (SH20) in Auckland.

After initial studies were carried out to assess the impact of this motorway extension on the existing pipeline, located along the side of the road, a new pipeline route was approved that moved the pipeline away from the road and into an adjacent field.

Vector said that, since the pipeline was the only source of natural gas for customers in the upper North Island, special care had to be taken to ensure that the supply risks were managed. To achieve this, it was proposed that a new section of pipeline be constructed and tested in the desired new position, which would then be used as a bypass, and the final tie-in welds completed while the redundant pipeline was removed.

The new 200 mm diameter API 5L X42 steel grade pipeline was constructed in the summer of 2009, and took five weeks to complete.

South Island activity

Oil and gas activity on the island is mainly contained to exploration.

Companies such as L&M Petroleum and Comet Ridge are undertaking coal seam gas exploration activities onshore the South Island, while companies such as Origin Energy and New Zealand Oil & Gas have acquired exploration permits in the offshore Canterbury Basin, near the coast of Christchurch. While the companies state that it is too early to comment on possible pipeline developments associated with the fields, the amount of resources in the area suggest that this could be a possibility in the future.

In other pipeline developments on the South Island, Pike River Coal has completed a 600 mm diameter, 10 km dual pipeline to transport coal slurry from the Pike River Coal Mine, located 46 km east of Greymouth, to its nearby coal preparation plant, and return treated water back to the mine.

Constructed by Ferguson Bros, the pipeline was built mostly above ground so that it could be gradually rotated to reduce the wear of the abrasive slurry on the pipe material. The pipeline has a design life of approximately 15 years.

Looking forward: governance and regulation

In January 2010, Vector was appointed the lead agency in the management of events impacting New Zealand’s security of natural gas supply through high pressure transmission pipelines.

The Gas Governance (Critical Contingency Management) Regulation 2008 introduced a compulsory code that the gas industry must follow during events that impact the normal operation of the pipelines.

Under these regulations, Vector has been appointed by the Gas Industry Company (GIC) to act as the Critical Contingency Operator (CCO). This is a role that gives the power to direct pipeline users to take specific actions during a national gas supply emergency. The New Zealand Government has said that it is committed to growing the natural gas industry. At the recent APIA Pipeline Operators Group dinner held in Auckland, Associate Minister for Energy and Resources Pansy Wong stated that, looking forward, the GIC will continue to work with industry stakeholders to examine whether regulation would be needed with regard to the management of high pressure transmission pipelines, particularly noting the need for better regulation between transmission and distribution pipeline interconnections.

The GIC is also working toward establishing a gas trading hub and will begin investigations of how this would be integrated with existing practices in the near future.