8 Oct 2009

Genesis Energy to stop gas, coal exploration

7:29 am on 8 October 2009

Genesis Energy has announced it will stop gas and coal exploration, with the exception of its Kupe gas field.

New Zealand's third largest energy company, like other state-owned enterprises, has been under pressure from the Government to increase profits.

Like Contact Energy, Genesis moved into gas exploration to ensure it had enough energy for its power plants, which include the Huntly power station.

However, Genesis says it has enough gas locked in from pre-agreed contracts and a large enough stockpile of coal to ensure a safe supply for its plants at Huntly for some time.

The company says to maximise revenue it will now quit gas and coal exploration, except for its involvement in the Kupe gas field off the Taranaki coast.

General manager of corporate affairs Malcom Alexander says Genesis has bought enough gas to run its business for some time.

Mr Alexander says the decision was made without pressure from the Government.

Genesis says it has not yet decided whether it will pursue plans to build a power station in the Rodney District.

Huntly units to be retired

The company's five-year statement of intent says new cheaper sources of electricity from competitors will undercut most production from its Huntly power station within five years.

Because of the low cost competition, Genesis says four of its six Huntly generators are to be placed on a "retirement profile". Two of the four stations will go off line by 2014.

The four older units, built between 1973 and 1985 have a capacity of 1000 megawatts.

The company says these older units will generate less as the other companies produce cheaper power.

Genesis says effect will be to bring the company's value down by an estimated $268 million.