Gas reserves re-estimated

A major new natural gas discovery that substantially lifts the country’s gas reserves has been made by Todd Energy at its 100 percent-owned Mangahewa in Taranaki.  By Lindsay Clark.

While Todd Energy managing director Richard Tweedie wouldn’t provide an estimate of the size of the Mangahewa discovery, he says the company has recently discovered “a lot more gas” following the drilling of its Mangahewa-3 appraisal well early this year.

“We see a big upside at Mangahewa,” he reiterates.

From in its current fields, Todd is currently evaluating a potential 2000 petajoules (PJ) of new gas. This is additional to New Zealand’s current official reserves of 2100 PJ as listed by the Ministry of Economic Development.

If Todd Energy’s estimates of 2000 PJ of gas is later officially booked as reserves, it would take gas reserves up towards the original size of the giant 4000 PJ Maui field now nearing exhaustion.

Tweedie says the 2000PJ of new gas potential was made up not only of the Mangahewa field, but of additional gas expected from the Pohokura gas field, which is 26 percent owned by Todd; from its 40 year old Kapuni gas field (50 percent Todd) and from the company’s 100 percent-owned undeveloped offshore Karewa field.

“There are considerable upsides in our existing fields as well as new gas being found. We see potentially 2000 PJ of additional gas that we are actively evaluating,” he says.

Though Tweedie didn’t disclose how much of this 2000 PJ of new gas potential would come from Mangahewa, it must be a substantial part of this figure. This would re-rating of Mangahewa reserves up towards a similar size as New Zealand’s largest gas condensate field at Pohokura, which is currently listed with gas reserves of 880 PJ.

When the Mangahewa field was discovered by Fletcher Challenge Energy in 1997, 20 kilometres east of New Plymouth, it was first thought to be part of a much larger Kapuni Group geological structure that ran offshore and included what is now known as the Pohokura. Early reports from Fletcher Challenge Energy suggested the deep gas-condensate field could contain as much as two trillion feet of gas – roughly equivalent to 2000 PJ. However, later seismic surveys established clearly that there were two structures – one offshore (Pohokura) and one onshore (Mangahewa).

The original 1997 Mangahewa-2 discovery well located some 20 metres of hydrocarbon reservoirs distributed over a number of different zones, but the field contains what geologists called ‘tight gas’. That is, the rock contains much lower permeability and porosity that doesn’t allow the gas to flow as easily as it does in the free-flowing Maui gas field.

To get the gas to flow, Fletcher Challenge used a technique called hydraulic fracturing (‘fraccing’ as commonly called in the industry) to force open, under pressure, cracks in the rock around the wellshaft.

They ‘fracced’ just three of many other reservoir zones but ended up producing gas only from one zone of one well. As a result, the reserves were reduced to a 20th of the early estimates – just over 100 PJ.

Todd bought the Mangahewa and neighbouring McKee fields shortly after the Commerce Commission forced Shell to relinquish some of its former Fletcher Challenge gas field assets. Last year, Todd Energy said it believed Mangahewa could contain up to 250PJ of undeveloped reserves.

In late 2006 Todd began drilling the Mangahewa-3 appraisal well and carried a fracturing operation in mid-2007.

“We see a big upside at Mangahewa. People who live in Taranaki who have flown over it have reported seeing a giant flare,” Tweedie says. “That usually indicates a gas discovery,” he adds with dry humour.

Tweedie reckons New Zealand is going to get more of its future gas from ‘nearfield’ exploration and appraisal. Both the Maui and Pohokura partners are currently exploring prospects alongside their fields. There’s an upside to gas reserves beyond conservative forecasts, says Tweedie.

The Ministry of Economic Development has pushed out the year it was forecasting gas supply would be exceeded by demand, he says. A couple of years ago the ministry forecast a gas shortage from 2010. Last year it pushed the supply-demand crossover out to 2014. Tweedie says the ministry recently told him it may push this sufficient gas supply date out further to 2016.

“I’ve been saying for some time that it will be well beyond that.”

The reservoir engineers who produce the estimates of reserves are quite conservative in the early stages of a field, he adds. Modelling of reservoirs by these engineers is amended over the years as experience of production history is built into the new models.

When the Kapuni field was discovered 40 years ago reserves were estimated at 250 PJ. Total reserves at Kapuni have risen over the years more than four times to 1100 PJ. Even the remaining Kapuni reserves are 260 PJ — or the same as the first estimate.

Pohokura, now the country’s largest gas field with the decline of Maui, was likely to be not far behind Kapuni in size at about 1000PJ, says Tweedie. The first Pohokura wells began flowing over a year ago but its offshore production wells are still being drilled. The field will be fully onstream in mid-2008.

“There a lot of good signs coming from the Pohokura production wells drilled so far,” he adds.

Todd Energy also has up its sleeve the undeveloped Karewa field about 50 kilometres offshore from Kawhia Harbour. Karewa contains only “dry” gas — mostly methane without the valuable condensate light oil that all other Taranaki gas fields contain.

Todd has been investigating using an innovative small compressed natural gas (CNG) tanker to ship gas to port where the gas can be pumped straight into the gas network. This would be cheaper than building a pipeline to shore.

Even so, Tweedie admits that the economics of the Karewa development will require a very high gas price and “the field is likely to remain at the tail end of a pipeline of projects.”