TAG Oil Assumes Sole Risk on SuppleJack South-1A Well Testing

Canadian oil and gas exploration company TAG Oil has announced it will continue further completion operations on the SuppleJack South-1A well in PEP 38765 on a sole-risk basis, without its two original partners on the project, Austral Pacific and Tap Oil.

Drew Cadenhead, Chief Executive Officer of TAG Oil, said that though testing of the first of two potential zones in the onshore Taranaki well recovered water instead of gas, he believed that it was too early to call it quits.

TAG planned to perforate a different Lower Mt. Messenger sand at an along hole measured depth of 1958 m, and flow test for hydrocarbons over a two week period.

"Though we recognize that there is a risk, we plan on leveraging a few operational techniques now common in North America, but previously untried here in New Zealand," Mr Cadenhead said.

Austral Pacific said in an earlier press release that they expected the shallower Mt Messenger sands to flow gas on test. However, Austral has decided not to participate in the flow testing of this as it perceives it has limited reserve potential. Tap also said the well is unlikely to flow commercial hydrocarbons.

TAG has a 13.33% interest in PEP 38765, which is operated by Tap (50%), with Austral Pacific holding 36.67%.

Meanwhile, TAG Oil said it commenced drilling of the Arakamu-1 well, near Eltham in onshore Taranaki, on January 9, using Ensign Rig 19.

Arakamu-1, which is 100% owned by TAG Oil, is 4 km away from the recently-discovered Cheal oil and gas field. The well is being drilled directionally to a measured depth of 2387 m with a true vertical depth of 2250 m, and will test multiple Miocene-aged targets including horizons similar to those found at the Cheal field.

TAG currently has several drillable exploration prospects in its portfolio, and anticipates drilling four wells in the Taranaki Basin and one in the Canterbury Basin over the next 12 months, in addition to flow-testing the Supplejack wells in PEP's 38741 and 38765.

"We are continuing to acquire seismic over our large land base, adding new prospects in lightly explored areas," Cadenhead said. "We shot 3-D seismic over our permit last year and Arakamu-1 is the first of at least two wells we plan to drill on PEP 38757."

On the country’s oil and gas prospects, Mr Cadenhead said New Zealand is under-explored compared with most other notable gas producing regions of the world. “The high percentage of large discoveries resulting from the few wells that have been drilled confirmed there is plenty of potential," he said.