NZEC to delay exploration work
New Zealand Energy Corporation is shifting its focus in central Taranaki, from exploration to concentrating on getting more out of some veteran oil and gas fields it is about to acquire.
That means the company will park its drilling operations in its Eltham and Alton exploration permits further to the south, which so far has resulted in five oil discoveries and results pending from two more just-drilled wells.
But in an operational update just released, NZEC says while the pending wells could result in additional production and cashflow, it does not believe flow rates from the new wells would be enough to achieve anticipated targets, so the company's previous production guidance has therefore been withdrawn.
NZEC is about to buy several existing central Taranaki onshore assets from Origin Energy, including the Tariki, Ahuroa, Waihapa and Ngaere (Tawn) oil and gas fields and the Waihapa production station east of Stratford.
The update says that once the deal is concluded, the company will get stuck into several new projects in the Tawn area.
NZEC says it needs to increase near-term production and cashflow while reducing exploration expenses.
"To achieve this objective, NZEC is delaying the remaining two wells in its Eltham/Alton drill programme to concentrate on commercial opportunities in the pending acquisition of assets from Origin Energy," says the update.
The company adds this in no way diminishes its view of the prospectivity of the Eltham and Alton permits - it is simply that NZEC wants to focus on lower- cost opportunities that are close to existing infrastructure.
"The acquisition from Origin includes petroleum licences that are central to a network of oil and gas- gathering pipelines and the Waihapa Production Station."
The update says that once the acquisition is complete, NZEC will reactivate six wells already drilled into the deep Tikorangi formation using a technique known as gas lift, which allows wells to flow even though there is insufficient reservoir pressure.
The company also considers that a further six previous wells have potential for what is known as uphole completion - in other words, NZEC will test shallower geological formations for their oil and gas potential.
"Recompletion of these wells would be significantly less expensive and faster than drilling new wells, and successful discoveries could be quickly tied to the production station using existing pipelines," says the update.
"Both the reactivations and uphole completions could bring near- term, low-cost production and cashflow to the company."
NZEC's technical team has also identified five targets in the shallower Mt Messenger formation in the south-west corner of the Tawn licence area, and will soon begin building a new site to drill into these targets once the Origin acquisition has closed.
Longer-term exploration plans for the licence area include accessing Mt Messenger targets from existing drill pads - many already have gathering pipelines in place - that can be tied in to the Waihapa production station.
The company also says it is advancing several new commercial opportunities to use the production station to its full potential.
Taranaki Daily News