Americans strike oil and gas in Taranaki

By FIONA ROTHERHAM

American independent Swift Energy has made a potential oil and gas discovery in Taranaki estimated at up to 500 million barrels - which would make it the largest find in New Zealand.

Company president Terry Swift announced the possible find at the 2000 NZ Petroleum Conference in Christchurch, saying it was discovered while analysing geological data relating to the wildcat Rimu-A1 well in PEP 38719, south Taranaki.

Swift and its partners, Australian-based Bligh Oil and Minerals and Calgary-based Antrim Oil and Gas, struck hydrocarbon shows when the onshore well was drilled last year.

Production testing at the Rimu well indicates there could be potential oil and gas reserves equivalent to 20-100 million barrels.

Mr Swift said that, based on the Rimu success, the Kauri structure within five kilometres of the well could be a very significant prospect with the equivalent of 200-500 million barrels. There is also estimated to be a further prospect, Tawa, in the same permit licence capable of producing 100-300 million barrels.

Even in world terms, such a find would be significant.

Rimu is Swift's first exploration well in New Zealand, and such a significant find will help sell the potential of New Zealand's oil exploration to other offshore operators, according to Clyde Bennett, New Zealand sector manager petroleum for Crown Minerals.

Another offshore prospect licence runs immediately below Swift's, along the same structural formation.

This permit area was surrendered by Fletcher Challenge Energy last year and taken up in January by Shell Todd Oil Services, which will now be reassessing its potential.

New Zealand's oil production is between 15 and 16 million barrels a year, much of it exported.

The McKee field in Taranaki has until now been New Zealand's largest onshore oil field, producing up to 44 million barrels.

Additional seismic work will start this week straddling the coastline of the south Taranaki peninsula that for the first time will simultaneously incorporate land and marine data.

Results from this seismic work will by midyear help prove up the finds' commercial potential. Mr Swift said it would take two to three years to bring the Kauri prospect to production.

Swift plans to drill two appraisal wells this year at the cost of around $US8 million. One will be at Rimu, while the location of the second will depend on the results of the onshore and offshore seismic shot.

Texas-based Swift has a market capitalisation of $US500 million, and Mr Swift says it is big enough to handle such a large prospect.

It was founded in 1979 by Earl Swift and is primarily a US onshore natural gas producer.

Mr Swift said there might be a need at some point in the future to source additional capital from the New Zealand market, "but we have to get through the riskier parts first."

Swift Energy came to New Zealand in 1995 and chose the Taranaki Basin for its first international well as an operator. If the prospects turn up gas, Swift said it would wait to develop as the New Zealand gas market was balanced at present and additional supply was unlikely to be needed until 2005-6.