26 Sep 2017

No luck finding fuel breakage culprit - council

3:29 pm on 26 September 2017

Refining New Zealand will not get much money from insurance over its broken fuel pipeline, but is not expecting to have to pay as much to get it fixed, it says.

The area where the pipe carrying fuel into Auckland was damaged.

The area where the pipe carrying fuel into Auckland was damaged. Photo: RNZ / Lois Williams

The company believes the steel pipe was damaged by a digger before it ruptured, spilling 60,000 litres of jet fuel and cutting supplies to Auckland for 10 days while it is repaired.

Fuel is now flowing again through the pipeline, which runs from Marsden Point to Wiri.

Northland Regional Council is investigating the spill as a potential breach of the Resource Management Act. Its regulatory manager Colin Dall said council staff had been trying to track down the landowner to see what he knows.

However, the owner is not listed in the phone book and they had been unable to get a hold of him.

Mr Dall said the property was a lifestyle block that the owner does not live on, and it was possible he knew nothing about what had caused the pipeline break.

He said it would be helpful if the man would get in touch with the council voluntarily.

Refining New Zealand told the stock exchange it did not expect to get much money from insurance over the break to its Marsden Point fuel pipeline, because the excess was too high under its business interruption insurance policies.

The company has not given any figures in its statement to the exchange but it downgraded the impact of the pipeline shutdown on its own business.

Last week it said lost revenue would be $10 million to $15m. Its latest estimate is $8m to $9m. It said that adding the costs of repairs, the impact on profit after tax would be $9m to $11m.

Refining New Zealand chief executive Sjoerd Post said the country needed to discuss how much infrastructure it needs and is willing to pay for.

"I think an extra pipeline is an extreme form of redundancy given its cost," he said.

"And of course I think there's a bigger societal conversation to be had around infrastructure, how it's funded and how much redundancy one wants.

"So we need to have a conversation about exactly what standards we want to live up to and whether we can actually afford it."

Mr Post said his company and others in the fuel industry were already looking at ways to minimise the risks of future disruption.

Airlines continue to face costs of disruption

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Auckland airport Photo: 123RF

Meantime, the impact of the 10 day jet fuel crisis for Air New Zealand was still uncertain, but analysts Forsyth Barr produced an approximate figure of $200,000 to $300,000 a day in lost revenue.

Airlines at Auckland Airport may not get their full fuel allocations for another week as work continues to fully restore the supply.

Energy and Resources Minister Judith Collins said two million litres of jet fuel had now arrived at the airport's storage facility, and that would increase to 15 million by the end of the week.

Trucks have also been carrying jet fuel from Wynyard Wharf in Auckland and Marsden Point in Northland.

Jet fuel allocations to airlines were increased from to 80 percent last night but Ms Collins said it may be another week before they were back to 100 percent.

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