Suspension of $300m offshore Taranaki drilling programme 'will cost jobs'

Monday, 16 September 2019

The self propelled CSOL Prospector on its way toward the Tui oil field off the Taranaki coast in June this year.

Future offshore oil and gas exploration off Taranaki, together with a number of high paying jobs, could be seriously affected after a major drilling programme off the North Island's west coast was prematurely suspended after only one well was completed.

Malaysian-based Tamarind Resources was due to drill three sidetrack wells off Taranaki but has now suspended the three-and-a-half month programme because the first well, Tui-3H, was dry.

The Skandi Atlantic supply vessel, seen anchored off New Plymouth on Monday, had been servicing the CSOL Prospector offshore rig until drilling was suspended on Friday, September 13.

An industry source, who wished to remain anonymous due to contractual obligations, said the suspension would affect up to 90 rig personnel, and hundreds of jobs in the region, including 60-70 sub-contractors servicing the drilling programme.

'The social impact will be huge, a lot of people will be asking a lot of questions,' he said.

The semi-submersible oil rig, COSL Prospector, in dock in Singapore.

* Drilling rig due off Taranaki coast within days to extend life span of Tui offshore oil field**

It was the first time in his decades' long experience in the industry that a drilling programme had been suspended, he said.

A rig supply vessel, Skandi Atlantic, was anchored off New Plymouth on Monday as discussions between Tamarind and sub-contractors continued on the future of the programme.

In a statement, Tamarind said it had been unable to reach an agreement with the owners of the CSOL Prospector rig, China Oilfield Services, to continue the programme after its first well - Tui-3H - did not produce hydrocarbons.

The drilling programme, estimated to cost $300 million, was intended to extend the life of the wells into the mid-2020s and produce an extra 6-8 million barrels of oil from the Tui field, which the company fully owns.

The Tui field, once the country's largest, produced 693,000 barrels last year.

Tamarind Resources' managing director Ian Angell said the well result was unexpected and the CSOL Prospector rig would be demobilised and rig operations suspended immediately.

Tamarind had intended to use the huge semi-submersible rig for 135 days after it began the programme on June 30 following a month-long delay due to bad weather.

Tamarind will continue to produce from the existing wells at the Tui field once the rig has moved off location, which will be completed shortly.

The company said the two remaining well prospects at Tui were 'robust, commercially viable and worth pursuing' but had been unable to agree to terms with the rig owners.

The rig is due to begin another exploration programme off Taranaki with Austrian-based OMV in mid-December.

The latest development meant the rig will become available earlier than OMV planned, a OMV spokesman said.

OMV was working with COSL on options, and consulting with a range of local and international drilling support and equipment suppliers in the coming weeks to see what flexibility the company does have, he said.

'At this stage OMV expects it will still be some time in November before it is able to get under way.'

OMV sees the results of its proposed Taranaki exploration campaign as pivotal to its forward strategy of assuring long-term energy security for New Zealand, he said.

The company is awaiting final regulatory approvals for these wells before it can commence its drilling campaign, comprising two exploration wells, Gladstone-1 and Toutouwai-1, and one near-field exploration well, Maui 8.

OMV has committed $500m to extend the life of the Maui and Pohokura gas fields.

Industry analyst John Kidd, of Enerlytica, said the suspension was unsettling and raised questions on when OMV's campaign would start.

The suspension of the Tui well programme was 'extremely disappointing' and placed more significance on OMV's programme, he said.

Greenpeace spokeswoman Amanda Larsson said OMV should abandon its programme off Taranaki and Great South Basin because of the potential for a major incident in adverse weather offshore.

Larsson said the CSOL Prospector had been unsuited for the rough conditions off Taranaki, and would risk more problems in the Great South Basin.