Government says carbon dioxide supplies being rationed and 'prioritised'

Friday, 13 January 2023

How we ended up with a carbon dioxide supply problem.

Duty minister Carmel Sepuloni says the Government knows businesses are having carbon dioxide supplies rationed and face extra costs following an industrial outage, but has brushed off suggestions from National that it could be partly to blame.

Earlier this week Todd Energy said a safety issue had forced it to shut down a facility at its Kapuni gas field in Taranaki which has been the only domestic commercial supplier of food grade carbon dioxide since the Marsden Point oil refinery closed in March.

The prices of bottled carbon dioxide and “dry ice” have since rocketed, posing a problem for food producers, craft beer manufactures and horticultural companies, many of which rely on carbon dioxide to either chill, package or grow food, or to put fizz into drinks.

Carbon dioxide is also used to chill some medical supplies during transport, but there appear to be no indications healthcare is likely to be significantly affected.

* Carbon dioxide plant outage may push up price of tomatoes and other produce

* No last minute reprieve for Marsden Point oil refinery

The closure of the Marsden Point oil refinery last year made supplies of carbon dioxide more vulnerable.

Te Whatu Ora procurement director Chris Morgan said hospitals were low users of carbon dioxide and it was working closely with its supplier, which was “prioritising supply for critical services”.

While some vaccines were imported in dry ice, it was not used for the domestic distribution or storage of vaccines, he said.

Sepuloni said the Ministry of Business, Innovation and Employment was leading “cross-agency work” to monitor the broader situation.

She said she understood gas distributors had prioritised critical-use customers and were in direct contact with their customers.

“There are alternatives to carbon dioxide from Kapuni and many businesses are already making good use of these. For example, some are importing carbon dioxide directly or switching to other gases,” Sepuloni said.

Duty minister Carmel Sepuloni says many businesses are finding alternatives to carbon dioxide produced from Kapuni.

“Others are employing already-developed methods to capture and re-use carbon dioxide from other processes, such as fermentation from food waste or during beer production.”

But she conceded not all businesses would have the ability to draw on alternatives and said the Government was “actively engaging with suppliers and key sectors to help them understand the opportunities to mitigate any potential impacts from the current shortage”.

Gas distributor BOC confirmed it was prioritising the supply of carbon dioxide to “critical medical, safety and water customers” and said it was rationing other customers and reviewing their allocations “in line with product availability”.

National Party energy spokesperson Stuart Smith noted on Thursday that Energy Minister Megan Woods had been warned by officials that the domestic supply of carbon dioxide would be affected by the closure of the Marsden refinery.

He said the Government should have done more to ensure the country had “sufficient supply chains” to deal with unplanned outages, such as the one at Todd’s Kapuni plant.

An executive at a meat company that was struggling to obtain carbon dioxide said the Government, the owners of the Marsden Point refinery and gas industry suppliers should be jointly held responsible for a lack of preparation.

Sepuloni acknowledged the Government was aware the refinery’s closure would “create some challenges in the CO2 market” but said it identified a number of opportunities to strengthen the domestic CO2 market” prior to the refinery’s closure.

“The sector has already begun implementing these opportunities which include increasing production at Kapuni, increasing imports, improving the efficiency of customers’ CO2 use, and investigating the feasibility of an additional domestic CO2 production facility.”

The current shortage of carbon dioxide did not change the economics behind the refinery’s decision to close, she said.

“This was a commercial decision made by its owners in response to falling refinery margins.”

Todd reiterated on Friday that the closure of its Kapuni plant was expected to be temporary but could not say when it expected to have an update on when it might reopen.

“The team are still working through root cause analysis and potential engineering solutions,” a spokesperson said.

The outage is not affecting the production of natural gas from its gas field and the carbon dioxide in that gas that was usually bottled at the plant was instead being vented into the atmosphere, she said.