Tag finds more oil flows in Taranaki

A Canadian oil company exploring for oil in Hawke's Bay has reported continuing success in Taranaki.

TAG Oil's onshore Taranaki Cheal-B7 discovery well is naturally flowing at an average rate of more than 1100 barrels of light oil per day plus associated gas, the company said.

The well was drilled to a depth of about 2100 metres and encountered 18m of high quality oil-and-gas-bearing sands.

TAG CEO Garth Johnson said the company's drilling programme continued to deliver "very significant results" with 14 consecutive, successful wells and more to be tested during the next few weeks. Another 10 wells were planned for Taranaki this year, along with workovers to some existing wells.

"In order to facilitate the anticipated new oil and gas production, further expansion to the Cheal Production Facility is now under way, which will ensure that all current and future Cheal wells can be produced concurrently," Mr Johnson said.

TAG has entered a profit-sharing arrangement with fellow publicly-listed Canadian company Apache Corporation to explore and potentially develop onshore East Coast petroleum-bearing formations, similar to lucrative North American formations.

The company had completed onshore seismic mapping and hoped to drill four sites by the end of May: two in Gisborne, one in Central Hawke's Bay and one in the Tararua District.

While TAG is based in Canada its operations are focused on New Zealand.

Last month the debt-free company reported an increase in production revenue for its third quarter to $15.9 million, compared with $4.7 million for the previous year.

Industry commentators say the East Coast is under-explored, with about 40 wells drilled in the past 100 years.

The East Coast has hundreds of naturally-occurring oil and gas seeps.

From the beginning of the last century to the late 1980s a hospital near Gisborne was heated using seeping natural gas.