Hopes a government tender for resource exploration in Southland could win new investment in the region have been dashed after no companies bid for the right to explore it.
A 1214-square kilometre area of the Waimea Plains to the northwest of Gore, including Riversdale and Balfour, was opened for tender in June. New Zealand Petroleum and Minerals believed there were significant amounts of lignite in the area, which could be used to produce coal-seam gas.
It was one of 23 blocks of land put up for tender in NZP&M's 2012 Block Offer.
Farmers and other residents of the area met Ministry of Business Innovation and Employment officials in August about the block offer process.
They raised concerns about the possible use of fracking, the controversial extraction practice being investigated by the Parliamentary Commissioner for the Environment, and land access issues.
However, Energy Minister Phil Heatley announced yesterday only 10 blocks had been awarded to companies, and the Waimea Plains block was not among them.
Venture Southland group manager enterprise and strategic projects Steve Canny said the lack of firm data on the area may have put off bids.
"The reality of these kind of locations in Southland is generally we have quite a lot of scant detail around geology," he said. "Common logic would indicate it is possibly quite a prospective location, but it is quite a high-risk opportunity."
Companies were reluctant to commit to an unknown quantity.
The onshore tender blocks which had been awarded were all in Taranaki, a region with a long history of oil and gas exploration and production, where much was known about underlying geology and prospectivity.
"I guess it demonstrates at this time there isn't an appetite for this kind of exploration in New Zealand, but that doesn't mean it won't come [to Southland] at some point in the future," he said.
NZP&M spokesman Britton Broun said the fact that nobody bid for the area was not a reflection of its prospectivity.
"Alone, the block was not sufficient to generate new international interest in developing coal seam gas in the South Island of New Zealand."
The block may be included in a future offer, he said.
"The Government has decided that future onshore blocks would first be nominated by industry, giving some indication that there is interest in the area."
The Shell-OMV consortium which is exploring the Great South Basin has taken on a new 8508sqkm permit area, east of the area it spent $50 million surveying last summer using the Polarcus Alima.
- The Southland Times