A Canadian oil company scheduled to drill exploratory wells next year at two sites north of Gisborne and south of Napier has dampened speculation of an East Coast Basin oil rush.
Trans-Orient Petroleum released a report in Canada saying its properties on the East Coast of the NorthIsland have a potential 12.6 billion barrels of hydrocarbons, with the possibility of recovering 38 million barrels from the Waipawa black shale and 65 million barrels from the Whangai shale.
The company said AJM Petroleum Consultants had assessed the company's fractured oil-shale in its 890,000ha onshore prospects in the East Coast Basin.
The best estimate "hydrocarbon in place" volume of 12.6 billion barrels was the total available for both the shales, but the overall extent and thickness of the shale zones had to be verified.
Chief operating officer Drew Cadenhead said the exploration was in its very early stages: "It's not like a gusher's going to be discovered and everyone in the area is going to get rich."
The area was rich in fractured rock which allowed oil to flow through it, but the key was the speed at which it came to the surface, he said. Oil prices had fallen from a peak of US$147 in July but even at around US$70 such projects were viable.
Cadenhead said if East Cape wells produced hundreds of barrels a day they would be economic.
Trans-Orient geologist Carlos Kazianis said New Zealanders eyeing the "black gold" should wait until drilling had explored the deep marine shales at the sites.
"All we've conducted is a study that indicates there is source rock that has significant total organic carbon content that is very thick and has potential to expel significant volumes of oil."
It would be wrong to describe it as a discovery, because that would imply oil was already flowing from wells "in big volumes".
Trans-Orient's permits require exploratory wells to be drilled by November 2009.
Forty wells have been drilled on the East Coast since 1960 - a relatively small number - and none was commercially successful.
