Disappointing result from single well triggered huge NZ gas downgrade
Tuesday, 19 May 2026
A major downgrade of the country’s gas reserves that is understood to have shocked officials was triggered by the disappointing performance of a single well that was widely reported as a success when it was drilled last year.
The Ministry of Business, Innovation and Employment estimated last week that the remaining amount of natural gas that could be economically extracted from the country’s gas fields plummeted by 23% over the course of last year to just 731 petajoules (PJ).
That is equivalent to less than seven years’ supply at last year’s usage rate.
The drop was partly due to the consumption of 108 PJ of gas during the year, only a little of which was replaced by new reserves coming online.
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But the major reason for the drop was a decision by Austrian oil firm OMV to reduce by 113 PJ its estimate of untapped reserves at the Pohokura gas field, which it jointly owns with Todd Corporation.
OMV completed a new infill well, Pohokura-5, in March last year, in the hope of releasing additional gas that it assumed was stored in an untapped portion of the field, which lies in shallow waters just off the coast of New Plymouth.
The well was initially hailed as a success, with Resources Minister Shane Jones describing it as “demonstrating the potential for further development of mature fields”.
But OMV has now confirmed it later realised it would not deliver the incremental gain it first expected and that had led to “a full review” of Pohokura’s reserves.
MBIE was “officially advised” of the outcome of the review in March this year, OMV’s spokesperson said. It is understood the ministry will have been required to keep the details confidential prior to the publication of its reserves report.
A source said the development showed how vulnerable the sector had become to individual disappointments now that production had shrunk to a small number of wells in fields that were mostly very mature.
The Pohokura field resembles an upside-down dinner plate and has been drilled both offshore and horizontally from onshore Taranaki. Gas industry sources said geologists had in the past come to differing conclusions about what might be going on there.
OMV now expects Pohokura to close in 2033. Earlier this month it advised officials it also expected to cease production at its Maui gas field by the end of the year.
But OMV’s spokesperson said it was “assessing future opportunities to extend the life of Pohokura”, which it described as continuing to play a vital role supporting gas supply.
The write-down of reserves at Pohokura is equivalent to about 9½ years’ imports of LNG that Government expects to enable over the 15 to 20 years by under-writing the construction of an LNG import terminal.
Finance Minister Nicola Willis and Energy Minister Simeon Brown have appeared to indicate the LNG project is still on, assuming efforts to procure the terminal can be concluded satisfactorily.
That is after earlier doubts that stemmed from a concern that the price of LNG could be pushed up significantly in the long-term by the conflict in the Middle-East.
Energy industry sources had told The Post in April they believed the investment was hanging in the balance.
Willis said at a conference hosted by the OECD earlier this month that the Government agreed with the Paris-based body that the LNG facility “would be a short to medium-term option” to plug the country’s energy gap.
“Over the longer term, what we want to see is enough investment and other renewable options that we do not need to be as reliant on that imported gas,” she said.
Major Gas Users Association spokesperson Josh Adams noted MBIE’s report estimated oil and gas firms still had another 1950 PJ of so-called “2C” gas reserves, which are reserves that are believed to exist but not currently be economic to extract.
That included a large amount of natural gas with a high mix of carbon-dioxide in onshore Taranaki.
Adams said there were some encouraging aspects to the latest reserves update, including from locally-owned Greymouth Petroleum over the performance of its onshore Turangi Field, where it made a significant discovery in 2024.
Analyst Argus Media reported the field was now believed to hold 380 PJ — a big chunk of the country’s remaining proven and probable reserves.
Adams said it had been known since 2018 that there were some serious issues at Pohokura.
“They found a pinhole leak in a subsea pipeline and shut the entire field. Prior to that it was running pretty well. When they went to turn it back on, some of the wells didn’t come back up and it was never the same afterwards.”
Jeffery Clarke, chief executive of gas industry body Gas NZ, said the Pohokura downgrade further increased the case for the Government to step up action to help get more biomethane produced from organic waste to market.
“We know that there is biomethane out there that we can produce and we can have 5 PJ a year by 2035, and 25 PJ by 2050 if we want it.
“We’ve had really good pick-up on our biomethane strategy from Labour and the Greens and we’re at a bit of a loss as to why it’s getting no traction at the moment.”