Canadian oil company Apache has been talking up the prospects for onshore oil finds on the East Coast of the North Island in a series of meetings where executives have also discussed how they would ensure hydraulic fracturing doesn't pollute local water supplies.

Apache is planning to drill four onshore wells, two near Gisborne and two near Dannevirke, as the first step in a joint exploration programme with TAG Oil, also from Canada, which has begun commercial oil and gas production onshore Taranaki, using so-called "fracking" technology extensively.

A report of the visit by Apache and TAG executives to the East Coast is reported in the New Zealand Petroleum and Minerals section of the Ministry of Economic Development's website.

"We think it will be a substantial prize," said Apache's global unconventional exploration manager Craig Rice of the potential for oil and gas finds from geological formations that are likely to require fracking to unlock hydrocarbons.


The MED report says Apache is "taking particular care liaising with affected East Coast parties, from landowners and Maori to regional and district authorities, about proposed seismic and drilling programmes, including isolating groundwater supplies from drilling activities and the safe disposal of drilling or any hydraulic fracturing fluids."

Shell New Zealand has been undertaking similarly low-key public engagement among Taranaki communities where the worldwide focus on the potential impacts of fracking on groundwater has stirred local anxieties.

Fracking involves fracturing rock formations, using high pressure water and chemicals to release so-called "tight" oil and gas. The practice is well-known in the oil industry, but has only recently begun attracting public attention, in part owing to poor regulation in the United States.

A recently released report by the Taranaki District Council shows some 41 exploration wells used fracking techniques between 2001 and 2011.

"There are large separation distances between most past hydraulic fracturing activities and freshwater aquifers," says the TCC report, released last month. It also found "no evidence that the natural geological seals above the petroleum hydrocarbon reservoir have been breached" on any of the fracking undertaken in Taranaki.

The report finds the risk of such leakage in Taranaki to be "very small", but notes that while it was "unlikely that contaminants will reach overlying freshwater aquifers in the Taranaki region", it was "not impossible."

However, the greatest risk of groundwater pollution was not from the fracking process itself, but from improper above ground storage and leaks of hydraulic fracturing chemicals and wastewater.

While Taranaki communities are well-used to the oil and gas industry, East Coast residents of Hawkes Bay have never previously experienced such activity. The gross onshore East Coast acreage being explored by Apache and TAG totals some 250,000 hectares.

Apache Canada farmed into TAG's Petroleum Exploration Licences 38348, 38349 and 50940, contributing US$100 million for stakes of up to 50 per cent in each prospect.