Exploration Showing a Good Success Rate

A strong reflection of New Zealand's prospectivity for oil and gas has been shown by the substantial lift in exploration wells drilled since 2000, and particularly in the past two years.

In his keynote presentation to the New Zealand Petroleum Conference, which had a record attendance of more than 520 of which many were from overseas, Associate Energy Minister Harry Duynhoven said a total of 149 wells were drilled in the past six years, of which 74 were wildcats.

In the past 24 months 69 wells were drilled. The Minister said that of the total 74 wildcats there were 12 discoveries, indicating a success rate of about 16%.

Mr Duynhoven said “we are shifting up a gear and working in NZ now were companies with deeper pockets and access to a greater number and wider mix of skills.”

The likes of Origin Energy, Australian Worldwide Exploration, Pogo Production Company, OMV, Swift Energy and Westech Energy have come to NZ and are building strong exploration portfolios.

At the same time downstream companies such as Genesis, Contact and Mighty River have taken positions in the upstream sector.

On the production front the Pohokura, Tui, Maari, and Kupe projects are “progressing well” and they are billion dollar investments. “Tui is a particularly good example of how quickly offshore prospects can be drilled and taken to development. The time from initial discovery to first production is only four years,” he said. To encourage exploration the Government introduced initiatives in 2004. These covered adjustments to taxation provisions, reductions in royalty rates for new discoveries and additional funding to promote investment linked to Government-funded seismic data made freely available with the block offers.

“Have these been successful?” the Minister asked. “I think it is too early to tell. We know that there has been a high level of interest in the data sets, and we know that there is particular interest in the Great Southern Basin survey.”

The Northland block offers produced two highly competitive bids and to comments made that insufficient blocks were awarded, Mr Duynhoven said it must be measured first in terms of the quality of the bids, not the quantity. “It is critical that future blocks are awarded to well-funded and technically capable explorers who are committed to work the acreage.”

A matter of concern for the Minister was the degree of litigation that has developed and said that while he did not doubt the legitimacy of companies pursuing avenues of dispute resolution, he would prefer to see them explore all other available avenues in settling differences.

“New oil and gas resources are found in basins at the end of drill strings as a result of your intellectual and physical endeavors, and not in the court room through legal maneuverings,” he said.