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The country’s most southern province has a lot at stake hanging on announcements, expected about now, concerning oil exploration in the Great South Basin. By ALAN TITCHALL
The first permits, covering eight percent of an area 1.5 times the country’s land mass, were awarded to three explorers, a consortium led by ExxonMobil New Zealand, another consortium led by OMV New Zealand, and Greymouth Petroleum. ExxonMobil was permitted for 27 months to carry out seismic surveys before making an announcement, which means the consortium is expected to reveal its findings before the end of the year, unless it applies to Crown Minerals for an extension. OMV has also been carrying out seismic surveying but has 36 months before making an announcement. The area has strong geological similarities with the oil and gas producing basins of Taranaki and South Australia and features the thick sediments needed to produce hydrocarbons. The area is also not affected by large scale seismic faulting found in most of New Zealand’s basins. Interest in the region started in 1965 when the first exploration licence was awarded to Mississippi Oil (NZ). Between 1976 and 1984 Hunt International Petroleum, who had been awarded licence over the whole Campbell Plateau, drilled eight wells with the oil rigs Penrod 74 and 78. Hydrocarbons were present in half of them. Phillips Petroleum joined Hunt in 1976 and oil traces were discovered with the Toroa-1 well. Another well, Pakaha-1, found nothing, and further drilling until 1984 received mixed results. The seismic data gathered during this exploration period proved valuable for the publication of GNS scientific study results in 2000. Then in 2004 the Toroa-04 seismic survey by Bounty Oil and Gas and Magellan Petroleum (who had been awarded exploration permits in 2001) provided the first new detailed data for over a decade, even though it only covered a small area. In April 2006 the government, in an effort to promote and manage petroleum exploration activities in the basin, commissioned an extensive seismic survey (known as the DUN-06 survey) of the northern section of the basin. This survey was part of the Government’s efforts to acquire data under a $15 million fund established in 2004 to lift petroleum exploration in New Zealand. The data was then offered freely to explorers to promote and encourage exploration in the hope that it would lead to the discovery of new petroleum reserves. In August of 2006 Crown Minerals put exploration blocks in the Southern Basin out for tender.
Reaping the investmentConfirming targets with seismic data is just the beginning. All going well the next step is the test drilling appraisal of any discovery. Even in the best scenario, it will be at least a decade if not longer before we see the production of any commercial oil and gas (read the Maari and Kupe stories in this issue) and any production in the South Basin will be an expensive exercise. This tough piece of ocean makes the North Sea look like a walk in the park. However, any significant oil and gas strike would mean a financial return to the Southland region in the order of billions of dollars of direct investment and create a building and job boom as it has done in the Taranaki region. A Business and Economic Research economic study in recent years found that the oil and gas industry contributed $733 million to Taranaki’s GDP, or close to 17 percent of total regional GDP, and employed around 773 people. Already supplying services to the surveying consortiums and looking forward to the best discovery scenario is the Southland Energy Consortium made up of around 175 businesses in the region under the auspices of Venture Southland which itself, is a joint initiative of Invercargill City Council, Southland District Council and Gore District Council. A united front and one-stop service for regional and business development, the Southland Energy Consortium businesses all have a focus and invested interest in oil and gas exploration and discovery, and brings together a range of technical and professional businesses. Included among these companies and their services are South Port New Zealand, our the southern most commercial deep water port which is located at Bluff and operates 24 hours a day, 364 days of the year. South Port’s primary assets consist of the 40 hectare man-made Island Harbour, a dedicated wharf and causeway servicing Rio Tinto’s New Zealand Aluminium Smelter, and a town wharf structure already used for servicing the coastal petroleum industry and bunkering vessels. Other existing services, such as industry training facilities servicing large operations such as Fonterra and Tiwai Point, have been developed as a result of Southland companies involvement in numerous large scale regional projects, both within and outside of the energy sector. And it not just about a future oil and gas energy sector that Venture Southland has identified in its regional energy strategy that it completed in November 2003. A significant proportion of New Zealand’s energy generation already comes from renewable hydro-electric and wind power generated in Southland. Wave and tidal energy options are also being investigated. There’s also those enormous lignite deposits and sub-bituminous coal reserves in the region. Southland sits on 72 percent of the national recoverable coal and lignite reserves, and contains a range of minerals (including silicon) which are currently being considered for extraction and other value-added opportunities.
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It has been over two years since the Government awarded oil and gas exploration permits for four areas of the Great South Basin that lies offshore from the coast of Southland and South Otago.