Oil explorer targets deep water

Oil and gas explorer Anadarko will begin survey work in frontier territory east of Cook Strait within the next 18 months.

The Texas-based company said it was encouraged by preliminary data to tender for the permit areas in the government block offers which were announced on Tuesday.

Anadarko's exploration manager for Asia Pacific, John Gordon, said two dimensional seismic work over 4300sq km could lead to a 3D study which would then narrow down potential drill sites.

"We've put forward a work programme appropriate [to the] potential for the block and [to] help us get closer to [a] decision on whether to drill the block or not."

Drilling a well in deep water could cost between $60 million and $110 million.

Gordon said water in the two permit areas was as deep as 2400m and on average was 2000m.

"It's within our operating capabilities and our experience. We've drilled numerous wells in this water depth."

Anadarko is based in Houston and is one of the world's largest independent oil and gas exploration and production companies, with 2.54 billion barrels of oil equivalent of proved reserves at the end of last year.

It is a deep-water operator and first entered the New Zealand oil and gas industry in 2008 in the deepwater Taranaki Basin and Caravel prospect in the Canterbury Basin.

The company says it ranks in the top five explorers that has drilled wells in depths greater than 1500m.

It was a 25 per cent stake holder in the Deepwater Horizon project which exploded killing 11 men and spilled huge quantities of oil in the Gulf of Mexico two years ago. Gordon said Anadarko was not involved in the planning, preparation and drilling of that well.

"The industry has learned a tremendous amount both in the prevention of similar incidents ... and also in the aftermath and the response to incidents like that."

Environmentalists have raised concern about the prospect of a similar tragedy around our coast.

Gordon said the response capacity had stepped up since the disaster and the industry had drilled thousands of wells and incidents such as these were extremely rare.

Drilling off Taranaki and the South Island will be done with a drill ship, the Noble Bob Douglas.

"We never can say for sure until we drill a well and find out what the fluid type is. We would expect more of an oil play in deepwater Taranaki and more of an oil and gas play in South Canterbury."