A Canadian company hoping to extract up to 14 billion barrels of oil on the North Island's East Coast is moving ahead with exploration.
A joint-venture featuring TAG Oil and fellow North American company Apache Corp has permits covering 900,348 acres across the East Coast, Poverty Bay and Hawke's Bay.
Last month, the Gisborne District Council granted resource consent to begin work for a drilling platform at Te Karaka. Ratepayers were not given the chance to make submissions, and opponents are considering legal action.
Despite the threat of an appeal, TAG has confirmed it has acquired a "state-of-the-art drilling rig" for its East Coast operations.
"Detailed geological and operational planning for four vertical wells has been undertaken, and the VR-500 rig has been tested in Taranaki on a number of TAG Oil wells," the company said in its 2012 annual report. "The rig is available to the East Coast . . . once resource consent from the district council is received."
TAG, which was continuing to "progress operations in preparation to undertake the first phase of drilling", said a goal had been to determine if there was a "viable shallow conventional oil play".
Consultation with iwi, councils and landowners was continuing to secure, and consent, multiple drilling locations identified from new data. "Land access agreements have been signed with a number of surface rights owners."
TAG's annual report also revealed the company entered into agreement in June with Rawson Taranaki Ltd and Zeanco (NZ) Ltd to acquire exploration permits covering about 800,000 hectares in the East Coast and Canterbury basins, which it said were "favourable geological areas offering high-impact exploration opportunities".
Under the deal TAG would undertake all future exploration and pay about $2.8m for 100 percent interests in the permits.
At March 31, the company had "approximately $105m cash on hand and no debt", the report said, and working capital of $65.4m.
In June TAG said its Taranaki Basin operations were delivering "excellent results", with daily production between 2600 to 2800 barrels of oil equivalent, a term used as a way of combining oil and natural gas reserves and production into a single measure. The company was confident that could increase to up to 5000 barrels in the next six to nine months.
"I'm proud to report our Taranaki operations continue to hit all milestones and are all being completed on time and on budget," chief executive Garth Johnson said. "With growing cashflow and production, a strong balance sheet and a large inventory of high- impact exploration opportunities, TAG is well-positioned to continue to achieve and grow."
- Sunday Star Times