The Government’s proposed ban on new offshore exploration looks likely to halt plans by Methanex Corporation for a $100 million-plus emissions reduction project at its Motunui plant.
BusinessDesk reported this week that the Canadian-based company uses natural gas from the Taranaki to make methanol and had been considering a project to recover and re-use CO2 from its production processes to reduce emissions per tonne of product.
But, the news agency said, this project is now unlikely to proceed due to uncertainty about the longevity of affordable gas supplies in New Zealand.
Well known industry commentator John Kidd, director of sector research at Woodward Partners told BusinessDesk: “This is a project that should have been an absolute slam-dunk. It’s good for emissions, it’s good for the economy and it’s good for gas continuity.”
Methanex New Zealand declined to comment on the emissions reduction project. However, in July it said it had secured sufficient gas to meet half its NZ requirements through to 2029, but noted its disappointment with the exploration ban which it said would impact it long-term.
Kidd reportedly said carbon dioxide recovery would be a good project, but it required a long pay-back period. Methanex refurbishes its production trains every five years and uncertainty from Government policy change meant it would struggle to justify investments needing more than five to 10 years to pay off.
Kidd said it is an example of the environmental costs of the proposed ban, which he believes is more likely to increase emissions than reduce them.
Last month, New Zealand Oil & Gas Ltd (NZX: NZO) chief executive Andrew Jefferies said the Government ban on new offshore oil permits had given overseas explorers the impression the country was closed for business.
He believed the firm would have had another partner for its Barque drilling programme off the Oamaru coast had it not been for the ban.
Kidd’s view was many exploration permits may be relinquished as they approach the next stage of work programme commitments in the next two years.
Sources: businessdesk.co.nz; interest.co.nz; nzresources.com