Government opens eight areas for oil and gas exploration

Wednesday 2nd April 2014 1 Comment

The New Zealand government has opened eight new areas for oil and gas exploration in its 2014 Block Offer, unveiled at a petroleum conference in Wellington by Energy Minister Simon Bridges.

A total of 405,000 square kilometres of exploration acreage is on offer and includes formally opening the previously unidentified New Caledonia Basin for bids, where Shell New Zealand has already been awarded an exploration licence out of sequence with the block offer system.

"The three onshore and five offshore release areas on offer make up a tender that ranges from smaller appraisal blocks in well-explored areas containing previously drilled wells, through to large blocks with running room in frontier regions where little to no exploration has taken place," said Bridges.

The only completely new areas to be offered are onshore on the West Coast of the South Island, covering a total area of 6,752.2 square kilometres, covering territory in the northern portion of the West Coast and stretching through to behind Nelson.

Further territory is being opened up both onshore and offshore in the heavily explored and producing Taranaki Basin, and new acreage is being offered on the North Island's East Coast, where preliminary exploration has sparked protest, but where commercially attractive shale oil and gas deposits are believed to exist.

Five offshore release areas in the Reinga-Northland, Taranaki, New Caledonia, Pegasus-East Coast, and Great South-Canterbury Basins are also being offered for bids which close on Sept. 25, five days after the general election.

Shell is planning wells in the Great South Basin in the 2014/15 summer drilling season.

The onshore Taranaki blocks include areas near the producing Kapuni, Tariki-Ahuroa, and McKee fields, with bids for areas of up to 250 square kilometres on offer. Other onshore areas allow bids for blocks of up to 1,000 square kilometres, reflecting their immature status.

The block offer announcements coincide with Monday's release from the Inter-governmental Panel on Climate Change, which further confirms the scientific evidence that human-induced climate change, much of it related to the consumption of fossil fuels, is now unavoidable and that measures to adapt to its onset will be needed, as well as to reduce its impact.

Bridges acknowledged the issue, saying "we need to reduce carbon emissions from our energy use and respond to climate change" but that "fossil fuels will remain an important part of the mix" for at least another two decades or more.

"Oil and gas will continue to play a key role in ensuring our energy supply is reliable and affordable," Bridges said, describing the government's policy as "mixed and balanced."

"It's not exclusively renewable or non-renewable. It's both," Bridges said.

Last year's block offer saw two new global oil industry players, Norway's Statol and Australia's Woodside Petroleum, take exploration acreage for the first time, with Statol taking acreage in the lightly explored Northland-Reinga Basin.

The government had hoped that another recent entrant, Texan explorer Anadarko, might find evidence of oil and gas in two deep-sea exploration wells drilled over the summer.

However, Anadarko's offshore Taranaki well was plugged and abandoned, and it elected not to drill a possible second well after drilling in the little-explored Canterbury Basin. Other hoped-for commercial finds from the summer drilling programme, in areas where oil and gas has already been discovered, have also delivered disappointing results.

Bridges announced the government is opening industry nominations for the 2015 block offer, allowing explorers to identify where they believe effort would be worthwhile.

BusinessDesk.co.nz

Comments from our readers

On 2 April 2014 at 1:26 pm Max Lewis said:

A fundamental rule in business is "If you can't measure it you can't manage it" and this drilling programme is allowing the govt to formulate a long term energy plan. If no commercial deposits are found them the country knows we need to move faster on developing sustainable alternatives. Go for it Simon. Max Lewis, Mt Maunganui.