US driller eyes Taranaki oil

By FIONA ROTHERHAM

United States-based Apache Energy is the latest overseas player looking at oil prospects in the Taranaki Basin.

Apache said it was now the most active exploration company in Australia. It has run a continuous drilling programme in the Carnarvon Basin off Western Australia for the past three years.

The company operates and is a 90 per cent stakeholder in the Corvus gas discovery off Western Australia, in which New Zealand Oil and Gas holds a 10 per cent interest.

Apache exploration manager Ray Barnes said the company had "not yet crossed the Rubicon" from Australia to New Zealand but was looking at permits here.

New Zealand's Acceptable Frontier Offer permit regime, introduced in 1995, allows explorers to bid when they like over any available area.

Permits in the sought-after on-shore Taranaki area are via a competitive bid, with the next tender due in September this year.

Several exploration companies active in New Zealand have indicated they are keen to sell down their stakes in various fields to spread the costs and risk.

Apache's expansion in Australia since 1993 has been mainly by acquiring other companies' interests in permits.

Mr Barnes said the Corvus gas discovery was significant, but would notgive estimates on size at this stage.

New Zealand Oil and Gas is not so coy, estimating the find could prove as large as the 430 billion cubic feet estimated at Pohokura, off Taranaki.

Though NZOG is confident the Corvus gas discovery will be developed within the next two years, Apache had a more conservative view.

Mr Barnes said development depended on further drilling and finding potential customers for the gas.

A further appraisal well is likely to be drilled toward the end of the year once a rig becomes available.

Despite technical difficulties during testing, a substantial gas column was found in a deeper part of the well. Gas flowed at a stabilised rate of 15 million standard cubic feet per day.

Corvus-1 has now been plugged and abandoned, rather than suspended for future production. It was always planned as an exploration well only -- a cheaper option than one designed for production.

NZOG exploration manager Eric Matthews said development at Corvus was likely because of the field's proximity to Apache Energy's gas processing facilities on Varanus Island, the hub for oil and gas collection in that area.

Apache has a pipeline with substantial spare capacity that links from the island to the Western Australian gas network.

Why would Corvus be developed ahead of the other big gas finds in this area? Mr Mathews said Corvus was cheaper to develop "because it is in 60m of water, which is quite shallow, and close to the infrastructure."

The State Department of Resources Development in Western Australia forecasts significant increased gas demand amounting to an additional 330 million standard cu ft a day by 2002-2003.