Taranaki's oil and gas explorers prepare for busy couple of years

Friday, 2 November 2018

New Plymouth Mayor Neil Holdom speaks earlier this year about the Government's decision to halt new offshore permits.

Oil and gas explorers in Taranaki are gearing up for a busy period that could see as many as 20 wells drilled or planned in the next two years.

Austrian-based OMV New Zealand was looking at up to two exploration wells offshore next year, while Tamarind Resources was scheduled to drill four sidetrack wells and an exploratory well in the offshore Tui field.

Onshore, Todd Energy planned to start drilling and hydraulic fracturing six wells early next year at the Mangahewa G site, while a rig, operated by AWE for a consortium including NZ Oil and Gas, and Mitsui, was drilling an exploratory well near New Plymouth.

Tamarind Resources country manager NZ Jason Peacock said their three and half month campaign would use a semi-submersible rig, the Hai Yang Shi You 982, as the company worked to extend the Tui field past 2022.

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Tamarind had operated in the Tui field, which included three oil fields - Tui, Amokura and Pateke - since 2017.

AWE drilling rig has begun exploratory work, north of New Plymouth.

Peacock expected the coalition government's impending decision to halt offshore exploration, which he described as 'chilling' for the industry, could affect the ability to find funding from overseas for projects.

However the decision would not have any material effect on Tamarind's development programme.

The Tui field had performed better than expected since the privately owned Malaysian company had taken over the operation.

'The potential to extend the oil field's life will mean jobs and flow-on effects for local economy,' Peacock said.

'The next two years will be busy for the company and other operators in the region.'

Austrian-based OMV New Zealand, which was cleared by the Commerce Commission in August to purchase Shell New Zealand assets, including the Pohokura and Maari fields, was looking at a number of offshore exploration wells in the Taranaki Basin, dependent on marine consent application.

More regulatory approvals lodged with the Environment Protection Authority would be needed before any further commitments could be made to invest in Taranaki, senior vice president Gabriel Selischi said.

The initial programme is across six Taranaki permits granted under the Crown Minerals Act 1991.

The company is committed under the permits to drill a number of wells during 2019-2020. If the wells proved commercial more appraisal drilling could follow, Selischi said.

There were no plans to develop Maari during 2019, and production would be maintained as much as possible as the field declined, he said.

An economic impact report commissioned by OMV estimated an offshore exploratory drilling programme over five to seven years could boost regional GDP by $210m, and household incomes by $105m.

The average cost of drilling one exploration well was $90m, of which around $39m, or 43 per cent, would be spent in Taranaki, the report said.

The number of drilling projects being planned in Taranaki meant a busy period for the industry during the next 12-18 months, Petroleum Exploration and Production Association chief executive Cameron Madgwick said.

The planned exploratory programmes were 'very welcome' for the region, he said.

Madgwick said there was just 10 years of natural gas supply left.

'If we don't make some major finds very soon it will have real impacts on the nearly 400,000 New Zealand homes and businesses who use natural gas and LNG.

'Our current supply won't be able to keep up with demand within three years, which will likely mean higher power and gas prices for users.'

The Crown Minerals (Petroleum) Amendment Bill to halt new offshore permits in Taranaki in three years is expected to be passed next week after its third reading in Parliament.