Coast emerging as oil producer

Last updated 05:30 25/06/2014

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The West Coast could soon emerge as a new centre for commercial oil production, with two groups zeroing in on production.

Energy and Resources Minister Simon Bridges yesterday signalled it was "reasonably likely" Perth-based Mosman Oil and Gas would move into commercial production after successful drilling east of Greymouth.

It would be the first commercial oil production in New Zealand outside Taranaki.

Mosman's executive chairman, John Barr, said the company was not in a position to assess whether the exploration permit it held near Lake Brunner would be viable for commercial production.

He confirmed the company now planned to drill up to six wells on the permit - double what it had indicated - having recently raised more money from shareholders.

"We're relatively confident, but we're certainly not at the stage where we've done economics [of commercial production]."

Mosman holds a 143.4 square kilometre exploration permit on the southeastern corner of the Kotuku oil seeps near Greymouth, which it says are the largest natural oil seeps in New Zealand.

Drilling for oil on the West Coast has been undertaken for more than a century, although it has never progressed to commercial extraction.

On June 13, Mosman informed New Zealand Petroleum and Minerals that it had made a discovery on the West Coast, and its shares tripled before losing much of the gains.

Further drilling by the Gloriavale Christian Community, on a permit near Mosman's, appears to be drawing closer.

Paul Pretorius, chief executive of the Grey District Council, said he understood a Korean-built drilling rig was expected to arrive at the community within weeks.

No-one from the community was available for comment last night, although its website says it expects to drill more wells in the hope of providing employment and wealth for the local community.

Pretorius said he understood the community had appraised the wells as potentially able to extract 600 barrels of oil a day, although the view from locals had long been that the region's oil was not economically viable to extract.

"We've always been under the impression there is oil out there at Kotuku and so forth, it just bubbles out of the ground," Pretorius said.

"But the information we had is that the actual source is limited - in other words it will never be big enough to be explored and exploited."

New Zealand's oil exploration industry has centred for decades on Taranaki, where on and offshore wells are credited with driving some of the strongest economic growth in New Zealand.

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Since taking office, National has talked up drilling prospects elsewhere, although the success has been mixed.

Petrobras, the state-owned Brazilian oil and gas group, abandoned its permits on the East Coast of the North Island in late 2012.

A historic well drilled by United States exploration company Anadarko northeast of Dunedin earlier this year was unsuccessful, casting doubt over its future activities in New Zealand.

On Monday, New Zealand Energy Corporation, a small Canadian explorer, handed back its permits at Castlepoint and Wairoa on the east coast, but said it still planned to continue operations in Taranaki and off the East Cape.

Bridges dismissed concerns about a lack of interest from oil explorers outside of Taranaki.

"There's actually, if you look at it, some strong interest and some encouraging signs on onshore petroleum," he said.

- The Press


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