Economic Development Minister Steven Joyce says the MET2 project is a clear sign of the confidence Todd Energy has in Taranaki afer more than 50 years. Image courtesy Neil Ritchie

Economic Development Minister Steven Joyce says the MET2 project is a clear sign of the confidence Todd Energy has in Taranaki afer more than 50 years. Image courtesy Neil Ritchie

By New Zealand Correspondent Neil Ritchie

FROM a 1961 “sub commercial” discovery to rivalling the coastal Pohokura field as New Zealand’s largest onshore gas resource, the development of the onshore Taranaki Mangahewa gas field is a story of innovation.

Economic Development Minister Steven Joyce officially opened the latest innovation – the NZ$120 million Mangahewa Expansion Train Two project commonly known as MET2 – in early May, describing it as another “clear sign” of the confidence Todd Energy still has in the country’s only producing petroleum province after more than 50 years.

MET2 more than doubles the amount of gas able to be processed from Mangahewa, from 20 to 45 Petajoules per year.

Propak Systems of Calgary fabricated the main processing units of the facility, with the standard design adapted for the Mangahewa field’s gas composition and to New Zealand electrical and seismic standards.

MET2 delivered its first gas within budget and slightly ahead of schedule about 18 months after the decision was made to proceed with the investment in October 2012.

About 218,000 man-hours were worked on the development – with no lost-time injuries – and Propak transported the processing modules to Houston, Texas, and then shipped them to New Zealand.

Todd Energy is also progressing “the detailed screening” of another project – the debottlenecking of the 13-year-old MET1 unit.

Additional land has already been acquired for this work that will involve additional compression equipment and low-pressure units. Given a favourable final investment decision, this project is expected to take between 18 and 24 months and will help ensure the field can maintain production rates as the natural reservoir pressure declines.

The success of MET2 also reflects Todd Energy’s geoscience expertise in understanding how to tap into the field, its decision to invest in the new “Big Ben” drilling rig and crew, and the execution of the plant construction phase.

The purchase of the NZ$42 million Bentec Euro 450 rig, imported into Taranaki last January, is enabling 18 additional Mangahewa wells to be drilled during 2014-2015, with 13 of these being new production wells.

The new rig purchase, additional drilling and other “hydrocarbon trades training” now available in the region, are all important components of the Todd’s strategy to develop a Taranaki resource that is run and operated by local people, delivering local and national benefits.

The development of the Mangahewa field has been a story of innovation from the beginning but particularly since Todd Energy took over as operator in 2006.

The Mangahewa-1 well was drilled north of and inland from New Plymouth in 1961, but the resource was deemed to be uneconomic to develop with the technology available at that time and it lay dormant for decades.

Mangahewa-2, drilled during the late 1990s, found more hydrocarbons but it was not brought into permanent production until 2001.

Yet continued innovation during the past eight years – advances in horizontal drilling and hydraulic fracturing techniques in particular – has seen Mangahewa move from a small field of little economic significance to become the country’s largest and most strategic onshore gas resource.

While the Mangahewa-3 well f lowed remarkably well from the sandstones without fracking, later wells sometimes involved specialist Canadian crews fracture testing the tight Eocene-aged Mangahewa Formation late last decade. Innovative fracking techniques continue today.

It is mainly Mangahewa gas which helps fuel the nearby Methanex New Zealand Motunui methanol plant and Mangahewa is also increasing the country’s production of both LPG and condensate.

Recoverable Mangahewa gas reserves have leaped from about 101 billion cubic feet to about 800 Bcf and further drilling successes may mean Mangahewa even overtakes the nearby near-shore Pohokura field, with its 1 Tcf gas of recoverable gas, as the country’s largest gas resource.

Another innovative measure to extract value from Mangahewa was the construction early this decade of a NZ$75 million LPG processing plant, the country’s first “straddle type” LPG facility. As well as raw gas from Todd’s totally owned Mangahewa field, the plant also takes the company’s 26% share of gas from Pohokura.

With a production capacity of 27,000 tonnes of LPG per year, the plant is capable of supplying just over 19% of New Zealand’s annual LPG needs of about 140,000 tonnes. The four 1000-tonne bullets store the propane-rich (68%) product and the gas is chilled to -65 degrees celsius, enabling a very high LPG recovery factor. Other LPG plants in New Zealand typically chill their gas to only -35 degrees or -40 degrees Celsius.

In January 2012, Todd and Methanex NZ signed a gas supply contract that will see Todd supply enough additional gas to enable Methanex to run the second Motunui methanol train for at least ten years.

Instead of the strict “take or pay” provisions of some other contracts, this arrangement provides flexibility in both the amount and composition of the gas Todd provides to Methanex. Todd Energy approved the MET2 project later that same year.

The scheduled combined capital expenditure by the two companies is estimated to be more than NZ$960 million, with Methanex spending about NZ$100 million refurbishing and restarting the second Motunui train, while Todd is still only partway through its NZ$840 million Mangahewa Expansion Project (MEP).

Todd is presently batch drilling the Mangahewa-17, 18, 19 and 20 wells from the Mangahewa E wellsite.