New Plymouth’s Motunui methanol plant will be restarting its second train thanks to a ten-year gas sales agreement between the world’s largest supplier of methanol, Methanex and local New Zealand independent Todd Energy.

The Motunui plant has sat idle for the past eight years and will be restarted at a cost of over US$60 million to Methanex, the plant is expected to commence production by the middle of this year and will add up to 650,000 tonnes of incremental capacity per year.

The gas in the sales agreement will be sourced primarily from the Mangahewa field in North Taranaki, which is wholly owned and operated by Todd Energy. The agreement is expected to have significant benefits for both the Taranaki region and New Zealand.

Todd CEO, Jon Young, said the appraisal and development of the Mangahewa field is an exciting project that the company expects will have positive implications for the regional economy and the wider national interest.

“However, we recognise that there is still a lot of work to be completed on field appraisal and development to support this agreement. This includes up to 25 new gas wells and a substantial expansion of our existing McKee plant,” Mr Young said.

“It is estimated that the projects and their combined capital expenditure of up to $860 million will make a significant contribution to New Zealand’s GDP over a ten year period. A significant proportion of that economic wealth and job creation will occur in the Taranaki region,” he said.

PEPANZ Chief Executive David Robinson welcomed the agreement commenting that in any language, $860 million of cash injected into the local economy will make a real difference.

“This is real money, creating genuine long term jobs, and generating export earnings on a significant scale,” Mr Robinson said.

"Todd and Methanex’s efforts to re-establish the mothballed methanol train is the type of initiative New Zealand needs to maintain current standards of living, reduce government borrowing and pay off debt. The decision to invest considerable funds such as these takes courage, particularly when a return on those funds is not guaranteed,” he said.

President and CEO of Methanex Bruce Aitken said, based on the improved natural gas supply position that has developed in New Zealand over the past several years, he was delighted to announce the restart of a second plant in New Zealand.

“Furthermore, we are very pleased to have entered into a long-term gas supply agreement with Todd Energy, a leading oil and gas producer in New Zealand. This agreement underpins higher production and provides for a long-term gas supply to our operations in New Zealand,” Mr Aitken said.
"The quantity of gas supply under this contract potentially allows us to produce about 7.5 million tonnes of methanol over the next ten years, representing multi-billion dollars of revenues,” he said.