Presentation to the Petroleum Conference. History of the NZ LPG Industry. Peter Gilbert Executive Director

1
Presentation to the Petroleum Conference.Histor
y of the NZ LPG Industry.Peter GilbertExecutive
Director
2
NZ LPG History has had 4 Phases

• Pre Kapuni and Maui
• Kapuni and Maui supply, with an emphasis on
  automotive use and rapid sales growth.
• Decline of automotive market and total annual
  sales.
• Development of non-automotive markets and
  reversal of sales decline.

3
Pre Kapuni and Maui

• LPG has been in NZ since at least the 1930s.
  Used mainly in the leisure and camping markets
  and imported in pre-filled containers. Some LPG
  was also imported in 90 lb cylinders from the USA
  for decanting in NZ.
• 1972 first bulk import of LPG into Auckland,
  Wellington and Christchurch. In 8 sea freighter
  modules, each having 2 x 2 tonne tanks.
• In 1974 imported first LPG road tanker.
• Development of forklift and bulk industrial
  market.

4
Kapuni and Maui LPG

• In 1974 Kapuni LPG supply available which
  replaced all imports.
• Late 70s growing domestic market began to be
  constrained at times by Kapuni supplies which had
  grown from 2,000 to 15,000 tonnes/year by 1979.
• LPG was distributed by rail to bulk depots and
  then by road tanker throughout the NI. The SI was
  supplied via rail tanks on the ferries to Nelson
  or Lyttleton.
• Maui discovered and agreements to develop were
  finalised.
• 1978 the LPG Association formed by request of the
  Minister of Energy.

5
NZ LPG Distribution System

• The Government expected that by the late 80s LPG
  and CNG would replace about 230,000 tonnes of
  gasoline. (about 80 of this target was achieved
  in the late 80s for a period of a few years).
• In November 1979 the Minister of Energy announced
  that six companies had signed a letter of intent
  to form a national LPG distribution company.
  Liquigas was formed by BP, NZIG, Offshore Mining,
  Rockgas, Shell and Todd.
• This is the only way in which we could obtain an
  efficient bulk distribution system

6
NZ LPG Distribution System

• 1982 Liquigas built the New Plymouth export depot
  and over the following 18 months the Auckland,
  Christchurch and Dunedin storage depots were
  completed. Seaview Depot was completed in 1988.
• The 1,000 tonne LPG tanker the Tarihiko was
  commissioned to supply Maui LPG throughout NZ.
• Total investment in Liquigas was approx 112
  million.

7
Liquigas Depots
Port Taranaki
Wiri Depot
Christchurch Depot
Dunedin Depot
8
MV Tarihiko
9
LPG Distribution
Auckland Depot
EXPORTS
Road out from Oanui
Rail link to Seaview Depot
Christchurch Depot
Dunedin Depot
10
Growth of Automotive LPG

• Government encouraged automotive LPG by
• Offering interest free loans to convertees.
• Offering subsidies to Industry to construct
  automotive retail facilities.
• Automotive LPG sales peaked in 1987 at approx
  75,000 tonnes used by approx 50,000 vehicles.
• In 1986 Government withdrew all conversion
  incentives.

11
Growth of Automotive LPG
12
Decline of Automotive Market.

• Industry funded a conversion grants scheme to
  encourage conversions. Scheme ran from 1986 to
  1994.
• This helped to prop up conversion numbers, but
  with
• Reducing petrol prices.
• Removal of remaining excise on diesel in Jan
  1991.
• Increasing conversion costs
• Auto LPG began a decline which continued until
  2001.
• In 2002 auto LPG sales were 24,000 tonnes used by
  about 10,000 vehicles.

13
Decline of Automotive Market.
14
Decline of Automotive Market.
15
Growth of Non-automotive Markets

• Industry responded to the decline in the
  automotive market by targeting the traditional
  domestic and commercial markets.
• Major markets
• Portable heaters, barbecues, camping.
• Domestic and commercial space and water heating.
• Forklifts
• Industrial applications.
• Since 1987 annual sales of non-auto LPG have
  increased from 25,000 tonnes to 120,000 tonnes in
  2002

16
Growth of Non-automotive Markets
17
Growth of Non-automotive Markets
18
Major Developments in the Non-auto Markets

• Huge increase in the use of twin 45kg cylinders
  for domestic installations.
• Reticulated distribution of LPG in
• Queenstown.
• Christchurch.
• Housing sub-divisions.
• A number of large industrial loads picked up from
  fuel oil users.

19
Estimated LPG Market Split
20
Summary

• LPG Industry has overcome the boom and decline of
  the automotive market.
• It has developed the domestic, commercial and
  industrial markets. The non-auto market has grown
  sixfold since 1987.
• It has retained core automotive customers in the
  Taxi, courier and fleet markets.
• It has had to adapt the distribution system to an
  increasing winter peak demand.
• It has had an excellent safety record.
• It stands on the threshold of the fifth phase of
  its development as it faces the decline of Maui
  product and moves to a Saudi CP pricing
  structure.

21
QUESTIONS?