Skip to main content

May 2018 NZ O&G Industry Update

By Neil Ritchie

After scouring the skies for signs of any significant offshore oil and gas activity, the Kiwi petroleum industry is looking forward to sighting a semi-submersible drilling rig working off the Taranaki coast next summer.

Malaysian company Taranaki Management has applied to the Environmental Protection Authority for the marine consents necessary to drill up to five development wells that will be sidetracked from up to four existing wells in the Tui mining licence PMP 38158.

And “a significant portion of the sidetrack development wells will be drilled horizontally, allowing access to adjacent, undrained portions” of the oil reservoirs within PMP 38158, the EPA says.

It is understood that all existing wells in the Tui, Amokura and Pateke oil pools are performing well and continuing to exceed forecast production levels. It is also understood recent work by Tamarind has included some front end engineering and design (FEED work investigating near field exploration opportunities.

And Tamarind now has total control of the Tui mining licence, following its recent acquisitions of former operator AWE and partner New Zealand Oil & Gas.

Tamarind managing director Ian Angell has recently said the moves are “a logical next step in our investment . . . we will be able to move quickly and in a focused manner to bring our field life extension plan to fruition. While there is much discussion about field decommissioning, Tamarind is confident with the strength of the Tui operating team in New Plymouth this area will have many years of remaining production.”

Meanwhile, New Zealand Oil & Gas is still trying to “farm out” its stakes in two offshore Canterbury Basin and Great South Basin licences.

NZOG and Aussie listed company Beach Energy are joint equal partners in the Clipper licence PEP 52717 and NZOG, as operator, recently got a permit extension to April 2019 before the partners have to commit to drilling in the Clipper licence, which contains the Barque Prospect.

Also offshore, NZOG has agreed in principal to acquire listed Aussie company Woodside Energy’s 70 percent interest in the Toroa licence PEP 55794 to increase NZOG’s interest to 100 percent. And NZOG currently has until April 2019 to make the “drill or drop” decision, as it is known in the energy industry.

NZOG's preference is for new gas-bearing acquisitions, as it is for many other explorers, primarily because natural gas can play a  crucial role in the transition to a lower carbon world over the next three or four decades.

As well, Beach Energy was recently utilising the Southern Star vessel to conduct routine diving and inspection work around the Kupe platform and along the subsea pipeline between the platform and the shore near Ohawe – all within mining licence PMP 38146.

Meanwhile, again onshore, NZOG, together with majority shareholder OG Oil & Gas (Singapore) are farming in to Taranaki licence PEP 55768, southeast of New Plymouth, with each company taking a 25 percent interest in the permit. AWE will remain as operator with a 12.5 percent interest and Mitsui will retain a 37.5 percent stake.

AWE and partners are scheduled to drill the Kohatukai 1 well in the fourth quarter of 2018, targeting the dual objectives of the Eocene aged Matao and Mangahewa sands, a prospect analogous to the near-shore Pohokura gas condensate field that currently provides about one-third of this country’s total gas production.

Canadian listed junior New Zealand Energy Corp recently released its calendar 2017 year results, including a small but positive operating cashflow from average production of 129 barrels of oil equivalent per day (boepd), with 87 percent of that being crude oil. This compared to average net daily production of 219 boepd (78 percent oil) during 2016.

NZEC’s net loss for the 2017 year was $4,536,800, including a $1,591,776 impairment loss attributable mainly to declines in the Copper Moki wells. This compared with a loss of $5,225,884 ($2,955,857 impairment) for the previous year.

Chairman James Willis has said the results from early in 2018 are good, due to the positive results from the new pump and completion installed during mid-February in the Copper Moki-1 well that had been producing an average of 160 boepd (90 percent oil) since late February.

The Waihapa-Ngaere joint venture (of NZEC and L&M Energy) is also proceeding with the next phase of the Waihapa enhanced oil project -- targeting an installation during the second half of 2018.

Looking to later in 2018, the Waihapa-Ngaere joint venture has agreed, in principle, to proceed with the next phase of the Waihapa enhanced oil project targeting installation in the second half of calendar 2018. “This project, together with the existing production and revenue base, provides a sound basis to grow the business," Willis has said.

As well, fellow Canadian listed junior and operator TAG Oil (70 percent) and minority junior partner ASX-listed Melbana Energy (30 percent) have updated earlier reports regarding successful production testing of the Pukatea-1 well, with production testing resulting in initial rates of 600 barrels of oil per day (bopd) on a 28/64” choke.

The oil produced was combined with other oil produced in the area and sold to the market at Brent oil pricing.

Finally, Todd Energy has been advertising for staff, including a reliability and integrity manager, a lead mechanical engineer, a maintenance superintendent, and a maintenance planning superintendent. Meanwhile, service companies SGS and Halliburton have been looking for assistant well test and coiled tubing service operators. And another service company Horizon Energy Services has been advertising for (petroleum) permit issuers.

All this indicates the energy industry in Taranaki is still active, though not as active as a few years ago.