Drilling of Cheal oil wells begins

Drilling of the first development well in the Cheal oil field in Taranaki started yesterday, Austral Pacific Energy said today.

The field is located in Petroleum Mining Permit 38156 in the onshore Taranaki Basin.

Austral Pacific holds a 36.5 per cent interest in the field and is the operator.

The Cheal B1 well is the first of four wells to be drilled back-to-back from the Cheal B site as part of the Cheal oil field development.

The Cheal B wells are planned to intersect Mt Messenger and Moki targets identified from 3D seismic data.

Austral chief executive Rick Webber said the start of drilling was significant.

"The Cheal Joint Venture has put in a place a development programme which will deliver oil production of approximately 1000 barrels a day during the first quarter of 2007, rising to approximately 1900 barrels a day during Q2 2007."

An independent reserves estimate put the probable and possible remaining reserves at 4.4 million barrels of oil for Cheal.

The start of drilling from Cheal B comes less than three months after the partners approved the development of the field and follows the award of the mining permit in July.

The permit allowed for production from Cheal for an initial term of 10 years with a right to extend the duration of the permit following the delineation of further reserves.

Total spending is budgeted at $25 million.

After drilling the Cheal B wells, the Ensign Energy Services Rig 19 will be moved to the Cheal A site to drill two further development wells. Existing wells will be reworked in December.

Austral Pacific's share of the development costs is $9.1m.

The other joint venture participants are TAG Oil (NZ) and Arrowhead Energy.

Production from Cheal started in July at rates up to 300 barrels per day.

The first oil from the field's permanent production facilities was expected to be available in the first quarter of 2007.

- NZPA