Gas bonus may lie in deep waters

By CHRIS DANIELS energy writer

Calls for more gas to be found may be answered by interest in oil exploration in the deep waters off the Taranaki coast.

Power companies have shelved plans for new gas-fired power stations because of a lack of gas contracts.

Such power stations are seen as crucial for supplying electricity to the country when dry weather restricts the amount of water that can be put through southern hydro stations.

Gas is often found by companies trying to find oil deposits, but the dominance of the large Maui gas field has meant that such discoveries, such as the Kupe field, have not been developed.

Exploration companies are now analysing a seismic survey of the deep ocean waters to the west of Taranaki.

The survey, conducted by the Institute of Geological and Nuclear Sciences and private company TGS Nopec showed signs of an ancient river delta.

Some of the biggest oil finds worldwide have been made in ancient deltas. The deep-water Taranaki delta is 130km long, 100km wide and 2km to 3km thick.

The Government is offering five blocks within this 42,000 sq km area.

Companies win the licences by submitting a work programme. The company that promises to do the most work - such as drilling or seismic surveying, will win the right to explore the block.

Tenders for the blocks close at the end of September.

Institute scientist Chris Uruski said a significant oil find was needed to change the overseas perception that New Zealand basins were dominated by gas.

The entire Taranaki Basin was still under-explored by global standards.

Increasing the availability of good-quality seismic data was a key factor in increasing the level of exploration activity in New Zealand.

Paul Gilleran, TGS Nopec's general manager for the Asia Pacific region, said the marketing of the seismic information was going "reasonably well".

However, the numbers of new exploration ventures were down around the world. One reason for this was the unrest in the Middle East.

Another reason for a decline in exploration was the recent mergers of some big oil companies. This had led to a re-evaluation of the companies' portfolios, which meant that assets seen as marginal were being sold.

This meant that oil production facilities, in places such as Indonesia, the Gulf of Mexico and the North Sea were on the market.

These were producing oil and therefore cashflow, compared with the risk of bidding for an exploration block off the coast of Taranaki.

Other difficulties in getting interest in bidding for blocks off Taranaki included a perception that if gas rather than oil was found, then it would be difficult to get a ready buyer for it, said Gilleran.

The distance of New Zealand from major oil-producing regions was another reason it was more difficult to get interest in exploring here, he said.

"I think if deepwater Taranaki was in the Gulf of Mexico it would have been producing hydrocarbons years ago."