Kupe Gas Development Project, Taranaki

The Kupe project is the first phase development of gas field discoveries 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 came online on 18 March 2010. It produces 0.07 petajoules of gas, which will power an average of 300,000 homes annually. It also produces 300t of LPG and 7,500 barrels of light crude per day. The project is expected to produce 20 petajoules of commercial sales gas per year. This quantity of gas will meet 15% of New Zealand’s annual needs. 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 petajoules of gas, with the reserve lasting for around 20 years.

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

Joint venture and finance

The development budget for the Kupe project was estimated at NZ$980m (US$594m). NZOG’s share is NZ$147m and Genesis Energy is NZ$20m. The total investment, however, reached $1.3bn.

Participants in the Kupe development are Origin Energy (via subsidiaries), which is the field’s operator with a 50% stake, Genesis Energy (via subsidiaries) with 31%, New Zealand Oil & Gas (via wholly owned subsidiaries) with 15% and Mitsui E&P New Zealand with 4%.

In October 2005 participants in the Kupe project announced that the development budget would be higher than anticipated. The higher costs were offset by a renegotiated gas supply contract with Genesis Energy and higher worldwide prices for condensate and LPG.

Genesis Energy is a major electricity supplier and receives all the produced gas because it needs long-term supplies for its new e3p power-generation project in New Zealand. There is a sales gas line to Kapuni from the processing facility. The LPG is delivered for the domestic market while light crude is entirely exported to refineries in Australia and the South Pacific.

Kupe construction

Technip was appointed construction manager for the project through an alliance contracting arrangement with Origin Energy. Origin Energy awarded the construction contract for the onshore and offshore portions of the project to Technip Oceania.

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

The Kupe project’s new onshore production station, situated 12km west of Hawera, was designed by Maunsell to process offshore gas. It was constructed by Technip and began in September 2006.

The rest of the project comprised 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 began in Taranaki in September 2006 and was completed in early 2010. One of the first actions of the project was drilling the three horizontal development wells with the ENSCO 107 jack-up rig. The first development well was spudded in the first half of 2007.