Tui oilfield reserves one-fifth smaller than thought, says operator

Umuroa off-loading to the tanker Akama at the Tui oilfield off the coast of Taranaki. Photo / supplied

The Australian operator of the Tui offshore Taranaki oil and gas field says probable reserves are between nine and 11 million barrels of oil smaller than the 50.5 million barrels previously thought to be recoverable.

If correct, that means Tui will probably stop operating some time in 2019 or 2020, although the company says it is exploring a variety of other prospects within and adjacent to the Tui field.

The reassessment of so-called 'P2 reserves' takes the estimated size of recoverable oil at Tui back to levels anticipated in November 2007. There had been three subsequent updates.

The "preliminary" in-house analysis "indicates that the gross initial developed 2P reserves recoverable from the existing four well development of th4e field will be reduced from the previously reported estimate ... to between 40 and 42 million barrels," AWE said in a statement to the ASX.

RPS Energy has been engaged to review the 2P reserves independently.

AWE, which holds a 42.5 per cent interest in Tui, New Zealand Oil & Gas(12.5 per cent), and Pan Pacific Petroleum (10 per cent) were all placed in trading halt on the Australian and New Zealand stock exchanges this morning, and had not been lifted at the time of this report. NZOG and PPP had yet to make statements.

NZOG shares last traded at 84 cents apiece, PPP at 18 cents, and AWE at A$1.47. The other party in the field is Mitsui E&P (35 per cent).

The 2019/20 cut-off date was based on operating costs for the floating processing vessel Umuroa, the oil price forecast at that time, and "no future infill drilling or exploration drilling success," said AWE.

The downgrade "will not have any immediate effect on the company's financial position, which remains strong, with no debt, and cash estimated to be in excess of A$100 million at June 30" and forecast oil and gas sales for the year to June 30 of more than A$300 million from its various Australasian oil and gas interests.

Tui outperformed expectations in its first two full years of production, turning in 14.23 million barrels in the year to June 2008, compared with an estimated 9 million barrels, 9.12 million barrels in the following year (six million).

However, a prediction of 5.1 million barrels for the year to June 2010 was shaved back to 4.8 million barrels, which was achieved.

AWE said it had "identified possible additional volumes of oil not accessed by the current production wells in the existing Tui-A accumulations."

"To recover this oil additional wells, or side tracks of existing wells, will be required."

Exploration prospects had been identified adjacent to the Tui field using seismic survey readings.