Oil find lifts prospects

Mark Reynolds

The energy industry has received a major boost with the confirmation that the Maari oil field off the coast of Taranaki is a development prospect.

"It's got to be good that a big company like Shell is going to be involved in a significant development here," said Eric Matthews, group exploration manager for New Zealand Oil and Gas.

"New Zealand has been seen as a gas prone area, so if we have something that is primarily an oil development then it means we will be looked at a bit more favourably," Mr Matthews said.

Shell operates and has a 49 per cent holding in the Maari prospect. The other partners are Cultus with 30 per cent and Todd Petroleum with 21 per cent.

Cultus previously had a 50 per cent holding but has sold it down in exchange for $US5 million from the other two partners. That selldown was prearranged as part of a deal which saw Shell and Todd also pay $US6.5 million towards Maari's initial exploration.

Shell said yesterday that it believes the field off the coast of Taranaki is a good enough find to sustain an economic development of at least 40 million barrels of oil. Such a development could take place even with international oil prices at their current depressed levels, said Shell Petroleum Mining manager for New Zealand Martin Trachsel.

New Zealand oil is usually of better quality than overseas crude. It generally has lower sulphur and wax content, which makes it cheaper to refine. It could easily be worth $25-$30 a barrel, making the 40 million barrels worth more than $1 billion.

The exact timing of any development of Maari will be decided by the joint venture partners in the field, with a decision likely by the middle of next year. The field should be producing in 2002.

Mr Trachsel said developing the field is likely to cost at least $US100 million.

It could costs as much as $US200 million.

The exact cost will depend in part on the level of infrastructure that has to be built. The Maari field is close to the Maui B development managed by Fletcher Energy, and Fletcher's floating production facility could be used to produce oil from both sites.

"Commercial discussions on such an option between the Maari and Maui joint ventures have yet to commence," Mr Trachsel stressed.

Maui B contains about 25 million barrels of oil, but Maui is mainly a gas field.

A pure oil play is cheaper to develop and market.

Maari is also likely to challenge in size New Zealand's largest oil discovery, the onshore McKee field that contains perhaps 70 million barrels of recoverable oil.

NZOG's Mr Matthews said the confirmation of Maari as a commercial find had special significance for his company, because it is sited close to NZOG's West of Maui prospect.

NZOG is currently looking for partners to explore its site and "Maari's success certainly will help the sentiment when we talk with people," Mr Matthews said.