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31 May 2011

Contact Energy opens $400 million development in Taranaki


New Zealand's first underground gas storage facility and a new 200 megawatt, gas-fired peaker plant were both officially opened today by Prime Minister John Key at Contact Energy's Stratford power station.

At a combined cost of over $400 million, the projects are a significant addition to Contact's portfolio. The projects are also representative of Contact's dedication and commitment to New Zealand, Contact Chief Executive, Dennis Barnes said at the opening today.

The gas storage facility and the peaker plant are important new assets for Contact and the country, and enhance the company's ability in the increasingly volatile energy market.

The Ahuroa gas storage facility is the first natural gas storage facility constructed in New Zealand and as such it provided a significant geological, engineering and construction challenge for the company.

"We were fortunate to be able to draw on the expertise of our majority shareholder, Origin Energy to develop Ahuroa from a concept to a working asset," said Mr Barnes.

The Ahuroa gas storage facility consists of a near depleted gas reservoir, to which additional wells and compressors have been added. The facility enables Contact to inject gas into the reservoir during periods in which it is not needed, such as in summer when demand for electricity is low, or when renewable energy is abundant.

The Ahuroa gas storage facility bridges the gap between the way gas fields would like to produce and the way in which the energy market likes to use gas. This ability to inject and extract gas enables Contact to operate its gas-fired power stations as they are required in the market and support weather driven renewable generation.

"One of its potential users is the peaker plant which will also play an important role in meeting the country's energy needs.

"The peaker plant will add to New Zealand's security of supply by balancing weather-dependent renewables such as wind and hydro, and adding to supply during periods of peak demand," Mr Barnes said.

Capable of going from a cold start to full-power and producing enough electricity to power 200,000 homes in ten minutes, the plant offers the flexibility to be able to meet spikes in demand.

Phil Pryke, Contact's Deputy Chairman, who attended the opening on behalf of the Contact board, acknowledged the support Contact had received from iwi, government and the Stratford community, in the development and construction of the two new assets.

Mr Pryke also acknowledged Contact's majority shareholder, Origin Energy, in managing the development and construction of the Ahuroa gas storage facility.

"Contact's commitment to community and iwi, its partnership approach and its significant investment programme in New Zealand are a big part of what makes Contact, Contact. Today would not have been possible without this commitment," he said.

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