Enterprise & Energy

Taranaki Community UpdateIssue 1, April 2013

In this issue

Keeping in touch

Frequently asked questions

Community forum

Activity update

Todd Energy is a fully New Zealand owned and operated company

and one of the country’s leading energy explorers and producers.Taranaki has been our home for over half a century.

Right now we’re working on a major development – the Mangahewa expansion project – that will bring many new jobs to this region, boost the local economy, and provide a secure, reliable supply of natural gas to households and businesses for many years to come.

You’ll no doubt be aware of this project from our communications with you over the last year through letters, community meetings, and

visits by members of our community team.

This Update is another way of keeping you informed about our activities. It’s part of our commitment to do what we reasonably can to minimise any disturbance our work may cause to our neighbours, to tangata whenua and to local communities.

We invite you to contact us by phone, email or in writing if you have any questions or concerns about any aspect of our operations. Our Community Relations Manager, Hamish McHaffie, is the best point of contact and can be reached at hmchaffie@toddenergy.co.nz or on 0800 001 007. We will endeavour to address any issue you raise in a sensitive and timely manner.

We look forward to keeping in touch.

Sincerely

Paul MooreChief ExecutiveTodd Energy

Need moreinformation?

Visit our websitetoddenergy.co.nzfor the latest updates or call 0800 001 007

Proud to be part of this community and its history

WOMAD artists Bassekou Kouyate & Ngoni Ba get Tikorangi dancing

Being a good neighbour

“We know it’s not always easy living near a well site and we want to do everything we can to reduce any potential disturbance for you and your family that might arise from our activities. That includes making it as easy as possible for you to find out what’s going on, and to encourage you to tell us about what’s

working for you and what’s not.

Here’s what we’re doing:

• We’ve established the community forum and we will continue our regular community meetings to update you on upcoming activities and work through any concerns.

• At our community forum, community meetings, and in future editions of this Update, we will be addressing in detail issues like noise and traffic and how these can best be managed.

• The latest information on our activities in your area is on our Community Noticeboard at toddenergy.co.nz.

• We’ll be making announcements in the Taranaki Daily News.

• You can contact us any time – day or night – on 0800 001 007.

• You’re welcome to email me at jcarson@toddenergy.co.nz or Hamish McHaffie at hmchaffie@toddenergy.co.nz .”

Janet Carson Communications Managerjcarson@toddenergy.co.nz

Supporting our community

“We’re working hard to be a positive, active contributor to the Taranaki community. Our sponsorship programme includes some exciting new projects in Tikorangi, such as the upgrade of the Tikorangi School swimming pool.

Some of our region-wide community support initiatives include a pledge of $2.5 million for building the Len Lye Centre, sponsoring the Todd Energy Aquatic Centre, and cornerstone sponsorship of the international WOMAD festival. We also contributed towards the new Coastguard vessel, Todd Energy Rescue.

If you have any questions about our community initiatives, please contact me.”

Cressida Gates Sponsorship Managercgates@toddenergy.co.nz

Keeping in touch in Taranaki

Protecting our environment

“We believe good operating practice and protecting the environment go hand in hand.

As we invest in new development projects, we minimise risks to the environment through state-of-the-art well construction, testing and monitoring procedures, and employing world

class staff and contractors. We also continue to evaluate new and greener technologies to improve our processes and minimise our footprint and impact in Taranaki.

The Taranaki Regional Council independently monitors our operations and environmental performance. The council takes soil and water samples, and publishes the findings of their monitoring on their website http://www.trc.govt.nz/oil-and-gas-compliance-monitoring-reports/.”

Winfred Boeren General Manager Developmentwboeren@toddenergy.co.nz

Front row - left to right: Paul Moore, Chief Executive Officer; Cressida Gates, Sponsorship Manager; Janet Carson, Communications Manager; Andrew Clennett, General Manager OperationsBack row - left to right: Hamish George, Facilities Project Manager; Alex McAlpine, Reservior Development Manager; David Bradley, Manager Health, Safety, Community and Administration; Winfred Boeren, General Manager Development; Hamish McHaffie, Community Relations Manager; David Salisbury, General Manager Commercial and Planning

The Mangahewa expansion project, looking ahead

“Although the Mangahewa structure was first recognised as a prospective site in the early 1960s, it wasn’t until the late 1990s that exploration and testing really got underway. The first well came on stream in 2001.

In 2006, we stepped up our investment in the area, taking full operatorship of the McKee and Mangahewa mining permits. Since then, we’ve drilled eight wells to further test the commerciality of the field while also producing natural gas and condensate.

The results of this activity provided the foundation for the Mangahewa expansion project, which was formally announced in January 2012 in conjunction with a 10 year natural gas sales agreement between Todd Energy and Methanex .

Since then we’ve commissioned an LPG production station, and our sister business, Nova Energy, has commissioned a gas-fired peaker power plant. Now we are further expanding our natural gas processing capacity, drilling further wells and building pipelines to transport the gas.

To assist with this development and to make life easier for our neighbours, we’ve commissioned a quieter, highly automated, purpose-built drilling rig, which will arrive in 2014. Because the new rig can move more quickly, and with fewer loads, road traffic will be reduced. We’re also focusing on reducing the visual impact of our activities including further landscaping of our well sites.“

Andrew Clennett General Manager Operationsaclennett@toddenergy.co.nz

Keeping in touch in Taranaki

Working responsibly

“One of Todd Energy’s hallmarks is our commitment to world-class health, safety and environmental management systems. We’re proud of our excellent health and safety track record and culture, and we work hard to maintain it, not just for the benefit of our workforce, but for our environment and our neighbours too.

At Todd Energy we believe that all incidents are preventable, and no business objective will ever take priority over health and safety. As part of this commitment, our staff and contractors are trained to identify and protect against events that could result in harm, and all are empowered to stop any work they consider is unsafe.

Our environmental commitments are an integral part of our day-to-day operations, and good environmental stewardship is the responsibility of all our employees. It’s what we call living our values, and it’s one of the many features of the Todd culture that makes working for this company so rewarding, “

David Bradley Manager Health, Safety, Community and Administrationdbradley@toddenergy.co.nz

Front row - left to right: Paul Moore, Chief Executive Officer; Cressida Gates, Sponsorship Manager; Janet Carson, Communications Manager; Andrew Clennett, General Manager OperationsBack row - left to right: Hamish George, Facilities Project Manager; Alex McAlpine, Reservior Development Manager; David Bradley, Manager Health, Safety, Community and Administration; Winfred Boeren, General Manager Development; Hamish McHaffie, Community Relations Manager; David Salisbury, General Manager Commercial and Planning

Activity update

Drilling – we are drilling at Mangahewa (MHW) C site off Tikorangi Road East. The well, Mangahewa 12, is the first of four additional wells to be drilled at the extended MHW C site.

Well testing – we are about to start well production testing on Mangahewa 9 at the MHW C site. This will include short periods of flaring in April, during daylight hours.

Helicopter activity – periods of helicopter activity will continue until May 2013 in preparation for laying down the Mangahewa Pipeline.

Traffic –we anticipate increased construction traffic in June/July to and from the McKee and Mangahewa Production Station. We will provide further information when the exact timing is confirmed.

Community meeting - our next half-yearly community meeting will be held in June and we encourage you to attend.

toddenergy.co.nz

Community forum We recently established a forum to meet interested members of the community and discuss our activities and their concerns in a more in-depth manner than

we can in our larger half-yearly community meetings.

So far this year we have held two community forums and plan to hold them monthly from now on. The forum has already provided us with good ideas to improve our communications, and we’ve received positive feedback from attendees.

We find that having 12 to 14 attendees allows for an in-depth discussion and ensures everyone has an opportunity to participate. If necessary, we’ll hold two forums each month to make sure all who want to can take part.

Please get in touch with me for details about the community forums or if you would like to join the forum.

Hamish McHaffie Community Relations Managerhmchaffie@toddenergy.co.nz

Frequently asked questionsWhat is the Mangahewa expansion project?

The project enables Todd Energy to get more gas from the Mangahewa field than is currently being produced. The project enabled Methanex to restart the second production train at its Motunui plant in July 2012, almost doubling its methanol output and creating over 30 new jobs.

The three main building blocks to this project are: drilling approximately 25 appraisal and development wells at 4-5 sites in the Mangahewa permit area; expanding the production station to process the additional production; and constructing pipelines to connect the well sites to the production station and the production station to the major Maui gas pipeline, which delivers natural gas around the North Island.

What are the timeframes?

The development phase of this project will be completed in four years with activities peaking during 2013. We expect it will produce 450 petajoules of natural gas over 20-25 years.

What will happen to the revenues from Mangahewa?

We’re investing over $800 million in this project and, because we employ a lot of locals and use local service providers wherever possible, this will bring real economic development and opportunities to Taranaki. We expect the project will create 390 jobs and directly boost Taranaki’s GDP by $180 million. Indirectly, we expect regional GDP to benefit by $270 million. During the first ten years of production, we estimate Todd Energy will pay royalties of $42 million per year.

Where will the gas go?

The natural gas will generate electricity during periods of high demand. It will be piped for direct use by homes and businesses, and will be processed into LPG for use in the South Island. We also provide natural gas to Methanex, through our ten year sales agreement, enabling them to increase output of methanol for end use in the production of many household products.

Why invest in natural gas?

Along with many other uses, natural gas delivers fast and reliable electricity generation, making it an important part of the energy mix. Gas also provides a fast and flexible way to address peak electricity periods. Todd Energy sister company, Nova Energy, last month opened its new gas-fired power plant which has a start-up time of 15 minutes. This enables Nova Energy to help meet electricity demand when hydro-lakes are low or the wind isn’t blowing, the benefits of which were demonstrated during the recent drought and saw the plant running 24/7 for around a fortnight and in a ‘peaking capacity’ for longer.

All care has been taken to ensure this information is correct at the time of publication.