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August 2014 O&G Activity Wrap

By Neil Ritchie

The New Zealand oil and gas sector is in fine shape, with total exploration and development expenditure during 2013 reaching $1.577 billion on the back of some unprecedented programmes, particularly offshore.

A total of 32 oil and gas wells were drilled during last year, according to the government’s Ministry of Business, Innovation and Employment, with the $1.577 billion spend being seven percent up on that of 2012.

And, with three offshore drilling units still in New Zealand waters, two of which may be here until late 2014-early 2015, it is likely this year’s total oil and gas exploration and development spend should be similar. Onshore activity also continues, albeit on a smaller scale,

And increased availability of natural gas, from both onshore and offshore fields, means gas production continues to climb, to a total of 181 petajoules, again a seven percent increase on the 2012 figure. 

As well, gas reserves have been revised upwards significantly, by 31 percent, from 2012, with known remaining reserves now standing at 2642 petajoules, the highest in 13 years. This reflects a significant increase to the reserves at several key fields, with sustained drilling programmes at the onshore Mangahewa and offshore Maui fields, as well as investigations at the near-shore Pohokura and coastal Kupe fields that have enabled those fields’ reserves estimates to be increased.

However, the production of crude oil and condensate (light oil) continues to slide, with total production for 2013 of just under 13 million barrels, 14 percent less than during 2012. The main reason for this drop was an extended maintenance shutdown at the offshore Taranaki Maari oil field during the late part of 2013.

But explorers are certainly continuing their search for more oil (and for more gas).

Offshore, the semi-submersible rig Kan Tan IV has moved from drilling the non-commercial Oi-1 and 2 wells for the Tui oil field partners -- operator Australian listed company AWE, New Zealand Oil & Gas and Aussie listed junior Pan Pacific Petroleum – to south of the Maari oil field and started the Whio-1 exploration well.

The Maari partners operator Austria’s OMV, Todd Energy, and Aussie listed juniors Horizon Oil and Cue Energy Resources are drilling Whio-1, targeting a potential resource of about 18 million barrels of oil. Success with Whio, just 4.5km southeast of the Maari wellhead platform, will open up additional exploration potential to the south of Maari, including the Matariki prospect.

And, at the wellhead platform, the smaller jack-up Ensco Rig 107 continues its extended campaign of drilling new development and water injection wells for the Maari partners.

As well, US major Anadarko Petroleum and partners Australia’s Origin Energy and Dutch-registered Discover Exploration now have until late 20121 to explore their Offshore Canterbury Basin licence PEP 38264, where they drilled the non-commercial Caravel-1 wildcat well off Otago earlier this year. The permit had been due to lapse in late 2016.

Various onshore exploration activities and development programmes also continue around Taranaki and in other regions.

TAG Oil continues developments at its Cheal, Greater Cheal and Sidewinder fields in onshore Taranaki, as well as starting the Waitangi Valley-1 wildcat well north of Gisborne in licence PEP 38348. Waitangi Valley-1 is the first deep well in the northern part of the onshore East Coast Basin for the Canadian listed junior.

Fellow Canadian listed junior New Zealand Energy Corp has won a petroleum mining permit, PMP 55491, covering its Copper Moki and Waitapu oil discoveries. The small mining permit, covering less than four square kilometres, has been carved out of NZEC's 100%-owned exploration licence PEP 51150 to encompass the Copper Moki and Waitapu fields.

The Copper Moki mining permit gives NZEC the right to produce oil and gas from the Moki and shallow Mount Messenger and Urenui formations for eight years, with the option to extend the permit. NZEC currently has four producing oil wells in the mining permit – the Copper Moki-1, 2 and 3 wells plus the Waitapu-2 wells. And NZEC has agreed to build 1.3km long gas pipeline connecting the Waitapu site to existing pipeline infrastructure by the end of 2014-early 2015.

London-listed Kea Petroleum and partner MEO Australian are drilling the Puka-3 appraisal well in onshore Taranaki licence PEP 51153, targeting a structure identified by a recent 3D seismic survey.

The earlier Puka-1 and 2 wells were drilled on the basis of 2D seismic data only and now appear to have been drilled on the edge of the Puka prospect, whereas Puka-3 is being deviated about 1.5km north and target a thicker sand development. Permanent pipework servicing production from the Puka-1 and 2 wells has also now been installed.

Fellow UK listed junior Mosman Resources plans to drill additional wells this year and next following some positive signs from its first two shallow onshore West Coast wells, Cross Roads-1 and Crestal-1, near Greymouth. The company hopes to soon shoot some 40km of 2D seismic data and is redesigning the Crestal-2 well as an appraisal well, with an anticipated spud date during September. Other appraisal activities also include flow testing the two discovery wells and undertaking revised reserves estimations.

Finally, Cameron Madgwick has been appointed as the new chief executive of the Petroleum Exploration and Production Association of New Zealand. The Taranaki-born man, who was most recently community engagement manager at New Zealand Oil and Gas, will start his Pepanz position next month. He replaces David Robinson who is now NZEC New Zealand country manager.