Austrian oil giant OMV is joining a partnership which aims to drill an exploration well at the Whio prospect off the Taranaki coast, near the existing Maari oil field.
OMV has signed a farm-in agreement for a 30 per cent interest in the offshore area called PEP 51313, and will become the operator for the licence by March next year, taking over from Todd Energy.
OMV would not say what it paid for its 30 per cent stake. But as part of the deal, it will pay for an initial single exploration well in the Whio prospect which is close to the Maari permit border.
OMV would not comment on the expected well costs, other than to say it was part of a wider drilling campaign and that rig costs are likely to be more than $350,000 a day.
A discovery at the Whio prospect - formerly known as Pike - could be developed using existing facilities at Maari.
This month, OMV agreed to pay for the drilling of the Matuku-1 prospect off the Taranaki coast late next year, which is expected to cost tens of millions of dollars. The Whio prospect is about 4 km from the Maari installations in 95 metres of water. Subject to getting a rig, drilling is expected to take place as part of OMV New Zealand's drilling campaign due to start in summer 2013/14.
If there is a commercial discovery at the Whio prospect, OMV New Zealand's share would rise to 69 per cent under the farm-in agreement.
A commercial discovery at Whio could be tied back to the Maari production platform. That means the development costs would be a fraction of the hundreds of millions a standalone development would cost.
The much lower cost of development also means the field would not need to be as big as a standalone discovery to make it commercially viable.
Whio, at 4km from Maari, is actually closer than the Manaia field, which is produced through the Maari facilities.
One of the partners in the PEP 51313 area, Horizon Oil, recently said the prospective resources in the permit area were 49 million barrels as a "best estimate".
However, that is an early stage estimate and is understood to include other prospects in the permit area.
Including OMV New Zealand, the new 51313 Joint Venture partners are Todd Exploration (35 per cent down from 50 per cent), Horizon Oil New Zealand (21 per cent down from 30 per cent) and Cue Taranaki (14 per cent, down from 20 per cent), also partners in the Maari JV.
The farm-in agreement is subject to regulatory approval.
"This farm-in works well with our strategy to mature opportunities in the Taranaki Basin in general, and in particular, near our core area - the Maari field," OMV New Zealand's managing director, Peter Zeilinger, said.
The Matuku-1 well is expected to cost tens of millions of dollars and could be followed by a second well. Matuku will be the first in a series of wells OMV plans to drill in the basin later next year.
The offshore Taranaki Maari oil field is expected to run for another 10 years, according to OMV.
- © Fairfax NZ News
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