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US President Barack Obama’s banning of deepwater drilling in American waters may mean more global explorers take another look at such frontier countries as New Zealand, and idle deepwater drilling rigs may make the opportunity even sweeter, writes Neil Ritchie.
“Absolutely,” says John Bay, chairman of the Petroleum Exploration and Production Association, citing the North West Shelf project, a 1984 offshore discovery in the “middle of nowhere” that marked the beginning of the transformation of the Western Australian oil and gas sector. The A$27 billion North West Shelf venture, which is currently Australia’s largest oil and gas resource development, accounts for over 40 percent of that country’s oil and gas production, though even bigger developments are in the pipeline, such as the A$43 billion-plus Gorgon liquefied natural gas project. “If we make a North West Shelf sized find then we would become a major oil and gas country. But exploring for deepwater discoveries takes a lot of time, money and expertise,” Bay says. “Yes, we can become that significant oil region if we make a significant discovery, or discoveries, that are subsequently developed. But that’s a big if.” It is also possible the country could become the Norway of the South Pacific, following in the economic footsteps of that Scandinavian country that grew rich from North Sea oil. New Zealand and Norway are similar-sized countries, with similar geographies, population (about four million people) and energy mixes. But Bay cautions against any over-enthusiasm, saying its takes years to explore offshore, particularly in deep water where the so-called “elephant fields” have been found off Africa and other continents. It takes more years more to develop such discoveries, most of which hold enough oil and/or gas to fuel a country for decades. However, he says the arrival of Anadarko and Petrobas are a signal that New Zealand has taken the next step towards being a small but significant player on the world petroleum stage. Texas-headquartered Anadarko first took 50 percent stakes in two offshore Canterbury exploration leases from Australian major Origin Energy and now operates (runs) those two permits, one of which contains the giant Carrack-Caravel structure, among the most promising prospect yet identified by Origin in New Zealand. Origin believes the twin crests of Carrack-Caravel could contain up to 750 million barrels of oil or 2.7 trillion cubic feet of gas and 500 million barrels of condensate (light oil). Anadarko later took a 45 percent stake in the sole Deepwater Taranaki licence from Denver-based Global Resource Holdings and its managing partner Randall Thompson. It has also taken over running that project and is part way through a multi-million-dollar seismic survey over parts of the licence containing several structures – named Romney, Coopworth, Corriedale and Merino – that the government’s GNS Science believes could each hold several hundred million barrels of oil and/or trillions of cubic feet of gas. Petrobras, listed on the Brazilian stock exchange but 55 percent owned by the Brazilian government, was recently awarded a large licence covering most of the unexplored Raukumara Basin north of East Cape. It also recently took a 50 percent stake in an offshore Western Australian licence. Both acquisitions are part of its strategic drive to look for giant gas fields in the Oceania region. Any subsequent developments will be focused on large-scale liquefied natural gas (LNG) exports. “Petrobras was quite clear that with ExxonMobil and then Anadarko, they knew they needed to take a closer look at New Zealand,” says Bay, who met several Petrobras executives when they were in Wellington in early June. “The entry of Petrobras is very positive . . . the fact that New Zealand is now seen as a place to explore should have a snowball effect, ramping up activity levels and investigations by other significant players.” He adds that the country is now “back on the exploration radar” as far as major overseas explorers are concerned, after fading when the last Labour-led government banned new gas-fired power stations and focused on renewable energy sources, while oil and gas played second fiddle. And, in a strange way, the BP oil spill in the Gulf of Mexico and US President Barack Obama’s banning of deepwater drilling in American waters, may mean global explorers take another look at such frontier countries as New Zealand. Indeed, having lots of deepwater drilling rigs idle may make easier, and cheaper, to bring such vessels down under. Two other New Zealand offshore geological basins currently being actively explored are the Northland Basin and the Great South Basin. Origin is scheduled to drill two wells off Northland later this year; Korimako-1 and Tarapunga-1 that have the potential to contain up to 894 and 360 billion cubic feet of gas respectively. Meanwhile, in the Great South Basin, two joint ventures headed by United States super-major ExxonMobil and Austrian giant OMV, are scheduled to drill several wells in that often inhospitable region at the bottom of the South Island during 2011-12. New Zealand private company Greymouth Petroleum may also drill in the shallower waters of the GSB. GNS analysis suggests there could be another four more frontier basins that may have oil potential of a similar magnitude to the GSB. And the discovery of more significant oil fields offshore, with perhaps several billion barrels in the Great South Basin alone, could provide significant change in national income, says GNS. Petroleum exports, nearly all crude oil and condensate (light oil), totalled $2.8 billion in the past financial year – behind only the dairy and meat export sectors. Bay says he would like to see “substantial drilling activity” beyond the Taranaki Basin, currently our only commercial oil and gas region, over the next five years or so. “A significant discovery in any new basin would be significant for both the exploration industry and the country.” The focus of the National-led government is firmly on transforming the New Zealand economy through the successful exploration for and development of the country’s oil and gas resources. Indeed, the theme of the 2011 New Zealand Petroleum Conference is “Transformation”, through, as Energy and Resources Minister Gerry Brownlee says, “unlocking our petroleum potential”. He believes petroleum has the potential to drive a step change in the country’s economic performance. “We very much want to send the message that New Zealand is prospective for hydrocarbons and open for business,” he says.
Energy NZ Vol.4 No.4 July-August 2010 |
The question is asked – does the arrival of two new major oil and gas explorers, US giant Anadarko and the Brazilian government-controlled Petrobras, put us on the map of world’s major petroleum exploration frontiers?