Methanex to Provide Funds for Radnor-1 Well

Another major gas consumer, Methanex New Zealand, is to help fund drilling of a deep gas prospect in onshore Taranaki.

Ed Davies, executive director of Bridge Petroleum Ltd, said that Methanex has entered into an agreement with Bridge and Westech Energy concerning PEP 38752. But further details were not being made available at this time.

Bridge, operator of the PEP 38752 permit, plans to start drilling the Radnor-1 well in August to test three individual Kapuni sand deep gas targets identified on a 3D seismic survey acquired last year.

Methenex's move into direct involvement into exploration to help overcome short to medium shortages of gas for its two Taranaki chemical methanol plants, follows recent announcements by other major downstream gas users Contact Energy and Genesis Energy of upstream exploration participation.

Genesis is farming in to the Cardiff deep gas prospect being drilled later this year by Austral Pacific Energy Ltd in addition to its involvement in the offshore Kupe field under development, while Contact has acquired an offshore Taranaki exploration permit.

As part of an agreement reached in June with other Maui gas contract parties, Methanex will get rights for up to 40 petajoules of natural gas from the Maui field, offshore New Zealand. Methanex said this gas, together with entitlements from other fields, will allow the company to produce approximately 1 million tonnes of methanol at its New Zealand facilities in 2004. In addition, the company now has the flexibility to produce up to 500,000 tonnes of methanol in 2005 if economic conditions warrant. The two Taranaki plants have a joint capacity to produce approximately 2.4 million tons of methanol a year.

Bruce Aitken, president and CEO of Methanex said then, "We are continuing to pursue opportunities to acquire additional gas to supply our New Zealand facilities on commercially acceptable terms."

Mr. Aitken also told the Methanex Corporation's annual general meeting in Vancouver recently that the Asia Pacific market (which the New Zealand plants have been a major supplier) has the greatest growth potential in methanol.

He also told the meeting: "Methanex has had a very simple strategy over the last 10 years. The most important element of this strategy is low cost. We know that to prosper in a commodity industry it is essential to have reliable, low cost assets."