NZOG says Kupe oilfield doing well

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New Zealand Oil & Gas (NZOG) says commissioning of its Kupe oil field off the coast of Taranaki is progressing well and it hopes to have permanent production up and running by March.

The first raw gas stream was taken from the Kupe last month and piped ashore to the processing plant near Hawera.

December also saw the first sale of LPG and this month the first shipment of light crude oil went to Australia.

The amounts of oil and gas from the field were variable but the commissioning process was going very well, said chief executive David Salisbury.

The commissioning period would continue until NZOG was ready to declare it ready for permanent production, which was expected to happen in March, he said.

"Once in permanent production, Kupe will supply 10 to 15 percent of New Zealand's annual gas demand and around half of the country's LPG requirements. For NZOG it will provide long-term income from three revenue streams."

NZOG has a 15 percent stake in the $1.3 billion project. The other stakeholders are Origin Energy as operator and 50 percent owner, state-owned Genesis Energy, 31 percent, and Mitsui, 4 percent. The field is expected to have a life of 15 years.

Meanwhile, the Tui field, in which NZOG has a 12.5 percent stake, saw production for the December quarter hit 1.3 million barrels, or an average of 14,200 barrels a day.

However, technical issues meant it might not quite meet the full year production target of 5.1m barrels.

In its summer drilling programme NZOG would be spending about $30m, Mr Salisbury said.

The programme got off to a disappointing start when only traces of oil and gas were found in the Albacore-1 wildcat exploration off Taranaki. NZOG concluded it was not commercial, was plugged and abandoned but would use data gained to help in other exploring other fields, Mr Salisbury said.

The Ensco 107 drilling rig had left New Zealand waters and the remainder of the summer's drilling programme would be done by the Kan Tan IV semi-submersible rig.

However, the rig has had success in Australian exploration, which has delayed its arrival here. It is expected to start exploring drilling a Hoki exploration well in late February.

Hoki-1 will be further from shore than any previous offshore Taranaki well, in a steep upper continental slope in water depths of more than 300m.

"It is a relatively high risk prospect, which has the possibility of containing significant recoverable oil resources."

Mr Salisbury said it was "more than likely" to contain oil.

NZOG was looking to explore another Taranaki field, named Gamma, in which it had a 100 percent interest.

It also plans to explore its Barque field, north east of Dunedin, in which it has a 40 percent stake.

Meanwhile, NZOG withdrew last month from a study group which was considering bidding for drilling in Romania.

NZOG was looking to expand its portfolio but became concerned that Australia's Nexus Energy had withdrawn from the group and the lack of progress it was making.

However, NZOG was still looking around the globe and Romania was still on the map.

"We still like Romania as a destination but we have elected not to continue in that joint venture," Mr Salisbury said.

Last year the company looked at a number of opportunities in Australia, and was still looking, but had walked away from all of them after doing the due diligence.

"It is a very competitive environment, we wouldn't expect easy wins anywhere.

"While it has a lot of attractive features, it is a difficult place to do business and find attractive opportunities."

- NZPA