KEY POINTS:
Austrian oil company OMV knows exploration is a risky game but one risk it hadn't figured on was sharks - not metaphorical ones.
One of the marine predators snapped off a cable towing hundreds of thousands of dollars worth of seismic gear during a just completed search of
the Great South Basin, south of New Zealand.
OMV, owned 31 per cent by the Austrian government and the country's largest industrial company, with partners PTTEP Offshore Investment of Thailand (36 per cent) and Mitsui Exploration and Production Australia Pty of Japan (28 per cent) won a New Zealand Government auction to search part of the 500,000sq km petroleum basin.
The OMV consortium will spend tens of millions of dollars exploring the wild, underexplored area over the next two years. Luckily for OMV, the expensive cable bitten off by the shark was retrieved by a following vessel and the company successfully completed a 14,000km survey of the basin.
Only eight wells have been drilled in the basin - six of them in the 1970s by Hunt International Petroleum, working with Phillips Petroleum, with a couple drilled in the early 1980s by Placid Oil.
Phillips stirred up a flurry of interest with its claims at the time that the Great South Basin potentially held 10 billion barrels of recoverable oil, but the gas and oil shows from half a dozen exploration wells failed to show enough commercial promise for gas, and only traces of oil.
OMV will not even start analysing the seismic survey results until later this year and it would be 2010 at the earliest before any exploration could be attempted.
To even bring a suitable drilling rig would cost more than $30 million.
OMV managing director Steve Hounsell said the distance between wells was huge but OMV and its partners would not have invested in the region if they didn't think it worthwhile.
"The price of oil certainly helps."
When OMV increased its interest in this part of the world, the price of oil was around US$20 a barrel, one sixth of today's price.
But he said the cost of drilling had gone up substantially as demand for exploration equipment exploded.
A drilling rig could cost around $600,000 a day - up 50 per cent on five years ago.
OMV this week will celebrate the arrival of its floating, production, storage and off-take (FPSO) vessel, Raroa, which with a 150m high wellhead platform that arrived from Malaysia earlier in the month, will form the bulk of its half billion dollar development of the Maari field 80km off south Taranaki.
The 10,000-tonne wellhead platform - half the height of Auckland's Sky Tower - was brought on board the world's largest heavy transport vessel, the Blue Marlin.
Taking advantage of recent calm weather, the platform was unloaded in the Marlborough Sounds by semi-submersing the Blue Marlin and then towed by special tugs to Taranaki.
Once the platform was installed in the 100m deep seabed, the Ensco 107 jack-up drilling rig would come from the nearby Kupe field to drill eight development wells, due for completion in the first quarter of next year.
The field is expected to have a 10 to 15-year life with its daily plateau production rate to be around 35,000 barrels. With a mid estimate of 50 million barrels of oil in the field, Maari is worth a gross $6 billion at today's prices.
OMV has a 69 per cent stake in the field. Todd Maari has 16 per cent, Horizon Oil International 10 per cent and Cue Taranaki Pty 5 per cent.
For OMV, which is the largest oil company in central Europe, the Maari field is its first investment on this scale outside Europe.
"Our challenge is to do it properly," Mr Hounsell said.
If things go to plan, tankers will take 400,000-450,000 barrels of the waxy oil every fortnight to eastern Australia for refining.
Because the equipment is so specialised, opportunities for New Zealand firms were limited. However, most of the service money will be spent here. The bulk of Raroa's 50 crew and the drilling rig's 50-80 staff will be New Zealanders.
The Government collects either 5 per cent of gross revenues or 20 per cent of the accounted profit, whichever is higher, as royalties.
Maari's oil bearing reservoirs are around 1300m deep and OMV plans to drill other strata at 2500m. It also plans to drill an appraisal well in an adjacent area, PEP38412m.
OMV is also a partner with Shell and Todd in the half-dozen Pohokura gas wells in Taranaki, which is helping to replace the rapidly depleting Maui gas field that provides 80 per cent of the country's gas. OMV also owns 10 per cent of Maui.
- NZPA
