NZOG set to explore prospect with huge potential

NZOG has been building its portfolio to add to fields such as Tui. Photo / Supplied

New Zealand Oil & Gas says exploration drilling of the Barque prospect in the Canterbury Basin, which has the potential to be the nation's biggest-ever hydrocarbon discovery, is expected to start in 2017, subject to securing suitable partners and a drilling rig.

The Wellington-based oil and gas company is a 50-50 joint venture partner in the prospect with Beach Energy.

Analysis of seismic data acquired in 2013 suggests an estimated prospective resource of 530 million barrels of oil equivalent (mmboe).

It says the chances of success for a discovery and subsequent development are yet to be fully assessed, but typically fall within the range of 10 per cent to 20 per cent.

Seismic data has "resolved three prospective formations, one previously unidentified, which combined have the potential to be the largest hydrocarbon discovery in New Zealand to date", it said.

NZOG's share would be 265 mmboe, based on its half share.

The Barque prospect, a large Cretaceous structural trap of approximately 150sq km, lies in about 800m of water and is about 60km offshore, NZOG said.

The target formations are between 2500m and 3000m below mean sea level.

BP drilled the nearby Galleon structure in 1985 "and demonstrated the presence of a rich gas condensate through multiple well tests".

Drilling in the adjacent Caraval prospect in early 2014 by US oil and gas company Anadarko found oil and gas shows, but not in commercial quantities. Anadarko is considering further seismic work.

Before that drilling, six test wells had been drilled since the 1970s in the Caraval, Carrack, Endeavour, Resolution and Barque prospects, all off the Otago/Canterbury coastline, without success, the NZ Resources website reported last year.

NZOG has been building its portfolio of potential reserves to add to productive fields such as Tui and Kupe.

Earlier this year, it secured control of the board of Cue Energy Resources after gaining 48 per cent of the ASX-listed energy company.

NZOG's shares closed up 1c yesterday at 50c.