Controversial "fracking" technology would have to be used to get oil out of the ground in Wairoa.
A resource consent application to drill down to 3500 metres, further than ever before, is about to be lodged with the Hawke's Bay Regional Council.
The drilling would show whether there was enough oil to justify the huge cost of hydraulic fracturing.
NZ Energy development manager Ian Brown told the regional council yesterday that the shale the company was targeting lay 3500 metres under the Earth's crust and would need to be "fracked", or hydraulically fractured using water and chemicals under high pressure, to extract the oil.
Public concern about fracking included the amount of water used in the process. Protesters have also cited other environmental impacts and the possibility of triggering earthquakes.
Dr Brown could not estimate how much water would be needed for a well, saying there were too many "variables", but said the industry had moved on from using fresh water.
"It can be salt water, waste water or even gas."
Oil and gas exploration in the Wairoa area was not new, with the first well drilled in the 1920s or 1930s, Dr Brown said.
NZ Energy had drilled 12 exploratory wells in the area between 1998 and 2007.
Commercial deposits of oil or gas had not been found until now, he said.
Part of the reason for the renewed interest was that the high price of oil justified the expense of drilling.
It would cost about $10 million to drill a well, with half that money attributed to the fracking process.
Dr Brown was confident the company would find the type of shale it was looking for, but said the hard part would be selecting the right fracturing process "to stimulate the rock" to get the oil to the surface.
He would not put a date on when the consent application would be lodged but said it would be within the next two or three months.
The company held Government-issued exploration permits in Taranaki, Wairarapa and along the East Coast.
- © Fairfax NZ News
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