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After last year’s slowdown, onshore oil and gas exploration activity is now accelerating, with multiple wells being drilled in many regions – from Waikato to Southland. By Neil Ritchie.
A variety of players across the exploration spectrum are involved in these latest onshore activities, including established players such as Shell, Todd Energy and Origin Energy, mid-sized companies such as Greymouth, minnows like Green Gate, and newcomers like British listed explorer Kea Petroleum. Kea listed on the London Stock Exchange’s Alternative Investment Market last February following an initial public offering that raised £6 million. The company had earlier raised about £7.2 million from a pre-IPO fundraising venture that attracted money from well-known British investor Nigel Wary and from Mark Knopfler of iconic British rock band Dire Straits. “Even though we were not in ‘dire straits’ financially, we thought we should take his money when he offered it,” Kea chief executive Dave Bennett has been reported as saying, referring to the legendary lead guitarist and frontman of the group that disbanded during the mid-1990s. Wray and Knopfler also backed former British listed company Rift Oil that was acquired by Canada’s Talisman Energy last year, a move that delivered a 300 percent return to Rift investors over four years. Kea started its first well, Wingrove-2, in onshore Taranaki in early April, targeting the previously drilled shallow Wingrove prospect that it hopes could contain up to 1 million barrels of oil. Wingrove-2 is expected to intersect and enable commercial production from the oil sands encountered by the non-commercial Wingrove-1 well drilled by New Zealand Oil & Gas during 1993. Kea says commercial production should be possible within six months due to Origin Energy’s Waihapa production station being only three kilometres away. In early May 2010 Kea was also scheduled to start the deeper Beluga-1 well near Todd’s McKee oil and gas field. Methanex New Zealand, which paid for the drilling of a nearby Radnor gas well that watered out about five years ago, is funding the drilling of Beluga-1 in return for rights to purchase any gas discovered and a share in the profits from any development. Investment banker and broker McDouall Stuart describes the Kea-Methanex deal as “groundbreaking and hopefully indicative of more such deals to come”. Methanex is contributing up to US$10 million to drill, complete and test Beluga. The methanol manufacturer has a 15-year gas offtake agreement with Kea, which believes Beluga could contain about 400 petajoules of gas and supply the needs of all three Methanex Taranaki methanol trains that can consume up to 90PJ per year. Methanex is presently running only one methanol plant, which is using about 35PJ of gas a year from a variety offshore and onshore fields. Kea chief executive Dave Bennett believes, “there is still a lot of potential left in onshore Taranaki. “And the beauty of onshore Taranaki is that if you find something then it’s able to be commercialised, developed, in a short time-frame, months rather than the years of any offshore discovery. “Taranaki is the only region, so far, to have any significant infrastructure and the availability of services is a lot better than elsewhere.” Meanwhile, Shell Exploration NZ and Todd Energy have finished two development wells in the more southern Kapuni gas field that is now in its 42nd year of production. Todd is also analysing the results of its recently completed three-well appraisal programme of its Mangahewa gas field as a precursor to possible further drilling aimed at making Mangahewa one of the country’s biggest gas resources, rivaling the largest, the more northern near-shore Pohokura field. Australian listed player Origin Energy has started drilling the first of three development wells in its southern Taranaki Manutahi oil field and, further north, Canadian listed company TAG Oil has started an optimisation campaign at its Cheal oil field involving repairing, re-entering and artificially stimulating wells. Greymouth is planning to test its New Plymouth airport well Waimanu-1 while preparing to re-enter either the Ohanga-2 or Urenui-1 well further north. As well, Green Gate is eying drilling its first well in Taranaki, probably testing the Skinner prospect near the Origin’s Waihapa oil field. Listed L&M Energy, New Zealand’s largest dual-focused conventional petroleum and coal seam gas player, is taking a break from exploring for oil and gas and is concentrating on CSG. It is part way through a six-well CSG drilling program in Southland and Waikato (the largest drilling campaign yet undertaken by the company) and says it is encouraged by initial results. L&M Energy is completing drilling of the previously suspended OM-4 well in Southland, logging and suspending the well for future re-completion as a CSG producer. Other wells the explorer is drilling include the Te Kuiti-1 well in south Waikato and the nearby Maclure-1 well at Ohura. Australian company Comet Ridge is drilling several CSG pilot wells on the West Coast (Macdonald-4P and Macdonald-6P) accessing coal seam gas from the Brunner formation and evaluating the deeper Paparoa formation. It is aiming to install gas and water flowlines and treatment facilities for produced water, as well as installing production facilities and pipelines to allow for future commercial production. Lastly, exploration minnow Widespread Energy is drilling the historic Kotuku oil seeps on the West Coast.
Energy NZ Vol.4 No.3 May-June 2010 |
While Greymouth Petroleum’s Waimanu-1 well at New Plymouth Airport and the subsequent erection of test equipment is obvious to anyone travelling through the Tarankai region, a lot more is happening out of sight down rural roads, away from the gaze of all but the locals.