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Onshore exploration update

By Neil Ritchie

New Zealand’s onshore oil and gas exploration is very busy, particularly in Taranaki, the only producing petroleum province, where activity levels are returning to similar levels as late last decade.

Conventional petroleum products, the oil and gas found in underground sandstone or limestone reservoirs, continue to dominate the onshore exploration scene and Taranaki continues to be the main focus for explorers.

However, some explorers are also turning to the unconventional – principally coal seam gas (CSG) and shale oil and gas plays – in various regions outside Taranaki.

The highlight of the onshore exploration scene in past few months has been TAG Oil’s Sidewinder discovery just south of Inglewood. The first well, Sidewinder-1, produced some of the strongest gas flows yet recorded from the shallow Mount Messenger Formation sandstoneslate last year.

Stabilised flow rates of 8.5 million cubic feet of gas, plus 44 barrels of oil per day, were achieved during initial testing, with the Canadian listed junior explorer believing first production should exceed 10 million cubic feet of gas, with flow rates after three years still more than 5 million cubic feet per day.

TAG also struck black gold with the second well, Sidewinder-2, encountering multiple zones producing light oil and natural gas. Initial test results for that well had not been announced by late March but TAG is already moving to drill the Sidewinder-3 and 4 wells.

Sidewinder's close proximity to existing gas and oil infrastructure, combined with New Zealand's low petroleum royalty rates, and gas prices that are substantially higher than in North America, combine to ensure development of the Sidewinder field will be cost-effective, efficient and commercially attractive.

TAG is also encountering drilling success at its nearby Cheal oil field, with recent development wells and workovers of existing wells markedly increasing production flow rates or adding substantial new reserves. It is planning more wells at Cheal and at the nearby Cardiff gas discovery, which is currently not in production.

In addition, TAG is active on the North Island’s East Coast, appraising the historic Waitangi Hill shallow light oil discovery and planning to evaluate other conventional and unconventional petroleum resources – various shale oil and gas plays scattered across that region.

Other established players – such as Shell, Todd, private company Greymouth Petroleum and Origin Energy – are also active in onshore Taranaki.

There are rumours that Kapuni gas field operator Shell Todd Oil Services and Todd Energy are planning to import a land rig from overseas for a multi-well programme, believed to be at least one more well in Todd’s Mangahewa gas field and up to three at Kapuni, New Zealand's oldest producing petroleum resource that started commercial production in 1969.

Earlier this year Auckland headquartered Greymouth said it planned a busy two years of exploration and development activities in its Turangi, Kowhai, Moturoa, Ngatoro (incorporating Kaimiro and Windsor), Surrey and Radnor oil and gas fields, as well as in several north and central Taranaki exploration leases.

Origin is also busy planning or actually drilling development wells in several of its onshore Taranaki producers that include the southern Rimu, Kauri and Manutahi fields and central Tariki, Waihapa and Ngaere fields.

Relative newcomer Kea Petroleum is about to test its 2010 Wingrove-2 oil find and probably drill another well to appraise a deeper formation at its more northern Beluga gas discovery.

Listed CSG and conventional explorer L&M Energy is scheduled to soon start drilling its first Taranaki exploration well, Talon-1 east of Eltham, targeting conventional oil and gas. The company is also involved in developing this country’s first certified CSG resource at Ohai, Southland, and is about to announce arrangements with a major industry in that region involving purchasing electricity generated from Ohai gas or, perhaps, also utilising the gas to fuel plant, equipment or motor vehicles. 

State-owned Solid Energy, Brisbane based Comet Ridge and others are also investigating CSG opportunities on the South Island’s West Coast, and the North Island’s Waikato and Waitomo districts.

Meanwhile, several new players have entered the New Zealand oil and gas exploration scene. Top among these new entrants is Canada’s New Zealand Energy Corporation that is rumoured to have struck oil or gas with its first well, Copper Moki-1, southeast of Stratford. NZEC also has one East Coast licence and has applied for another.

There are also newcomers Commonwealth Oil and Gas, Listed Ventures and RPT Resources that have applied for exploration acreage in or off Taranaki or off Canterbury. As well, Queensland’s Greywolf Goldmining has applied for an Otago CSG permit, in conjunction with New Zealand’s Golden Bush Mining, and on its own for a near-shore lease surrounding much of the Nelson region.

There are many other wells, too numerous to mention, likely to be drilled during 2012-14 in various parts of the country, though most will be in the Taranaki region.