May 31 (Bloomberg) -- Solid Energy New Zealand Ltd., the nation’s biggest coal miner, said its coal seam gas reserves beneath the North Island province of Taranaki are four times larger than previously estimated.
The state-owned company has 858 billion cubic feet of gas, equivalent to about 900 petajoules of energy, Christchurch-based Solid Energy said in an e-mailed statement, citing an assessment by Netherland, Sewell & Associates Inc. Previously the reserves were estimated at about 190 petajoules.
Solid Energy said the gas would be enough to run a 400 megawatt power plant for 45 years, once it was commercially viable. The company recently completed a trial at its Huntly demonstration plant south of Auckland that proved it can produce gas and generate electricity.
“Given the soft short-to-medium gas price outlook and the expected cost of gas production in Huntly, further commercial scale-up of coal seam gas production is not justified at this time,” Steven Pearce, general manager of gas developments said in the statement.
The company is applying for a five-year extension of its permit in the Taranaki region to identify the best areas and methods for extraction, it said. The Taranaki focus means Solid Energy will surrender other exploration permits in the South Island, while continuing work at Huntly, it said.
Prime Minister John Key’s government is planning to sell stakes of up to 49 percent in four state-owned energy companies, including Solid Energy, over the next five years.
Solid Energy earlier this month agreed to buy the assets of Pike River Coal Ltd., owner of the mine where 29 men were killed in an explosion 18 months ago. It will initially pay NZ$7.5 million, which may rise by NZ$25 million if coal extraction reaches specified levels.
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