Global interest in NZ oil, gas action
A new set of oil and gas exploration areas will be opened up for industry players to take a look at this week, ranging from the far North to the deep South, as well as off the East Coast of the Wairarapa and onshore around Dannevirke.
Energy minister Simon Bridges will confirm the 2014 Block Offer at an industry conference in Wellington on Wednesday.
And a few days later, New Zealand industry players will gather at a major regional oil industry meeting in Perth from April 6 attended by about 3000 people, with Kiwi-based companies hoping to attract interest from potential partners.
The industry gained a big boost at the end of last year when international exploration giants Woodside and Statoil arrived in New Zealand, when the 2013 Block Offers were awarded.
One source said there was "heightened interest" in the new blocks to be announced this week, with three or four new big global firms "sniffing" around New Zealand, though none were confirmed. Greatest interest is expected to be the Pegasus Basin and off the coast of the South Island.
But interest would have been fantastic if US oil giant Anadarko had made an immediate commercial discovery in its two wells drilled over the summer, the source said. "It would have been a bit of a gold rush this year [had Anadarko been successful]," the source said.
Even so, New Zealand's lightly explored "frontier" basins were of interest because there was a stable political and regulatory scene and plenty of new places to look. On the other hand, New Zealand was remote and expensive to explore. Anadarko and its partners spent about $300 million on just a couple of offshore wells this summer.
In new frontier areas, nine times out of ten nothing would be found.
The New Zealand oil and gas industry is worth about $2 billion a year and oil is the country's fourth largest export earner. The industry paid the Crown royalties of more than $400 million last year, and tax of about $300m.
As well as the large offshore blocks, there are also some onshore blocks including a large swathe running from east of Palmerston North to north of Waipukurau, and centred on Dannevirke. On the West Coast of the South Island, one onshore block runs from south of Hokitika almost as far as Nelson. The government has been consulting with councils and Maori iwi groups before finalising the exploration areas.
Explorers will likely be awarded permits to explore late in the year, though the timing may be affected by the September general election.
Last December, Norway's oil giant Statoil and Australia's biggest independent oil company Woodside joined the elephant hunt for monster oil and gas fields in New Zealand. Statoil will explore an area off the Northland coast and is hoping to find prospects that could contain hundreds of millions of barrels of oil, perhaps up to a billion barrels - world-scale fields. And Woodside is also looking for big game - oil fields of more than 100 million barrels or a gas field with trillions of cubic feet of gas.
But since then, United States giant Anadarko and partners came up dry in an exploration well off the coast from Raglan in Deepwater Taranaki. Greenpeace claimed that Anadarko's second well, off the coast from Dunedin was also a failure, but the company said it was too soon to be sure. "Detailed analysis" continued, though it cancelled a possible second well. "New Zealand is frontier territory and nothing is ever straightforward in frontier territory," Anadarko's Alan Seay said.
Anadarko is still carrying out a large scale seismic testing programme in the Pegasus Basin off the lower North Island.
That 40-day programme has been delayed by bad weather and technical gear problems and there was still almost a month of work to be completed.
Petroleum Exploration and Production Association, Pepanz, chief executive David Robinson said in the past two years, the annual block offers had seen "really good new interest into New Zealand".
The industry had a general idea of the new blocks this year, which had a "good spread" of acreage.
"Will there be interest in those blocks? It is hard to say, but New Zealand blocks are usually a good size, with sufficient scale to . . . increase the odds of finding something, so that's usually a big tick," Robinson said.
Global players would not have been put off by Anadarko's apparent failures to find commercial discoveries, given that frontier wells had a success rate of just 10 per cent to 30 per cent, anywhere in the world.
2012/13 financial year
Minerals $7,523,391 P
Energy Resource Levies:
Totals: Minerals $17,481,594