Southern offshore exploration for oil and gas and coal-seam gas around Otago and Southland was updated by OMV New Zealand and listed L&M Energy yesterday, two of the more active explorers in the South.
OMV is calling for a review by the Government to allow for initial frontier exploration permits to move from five to eight years because of their remoteness, depths, lack of historical data and costs.
L&M gave an overview of recent announcements and likelihood it will have gas flows from its primary Ohai-interest in Southland for testing within about six weeks.
OMV holds an exploration permit in the Great South Basin, alongside but separate from Exxon Mobil.
It had completed extensive hydrographic surveys and had a permit extension to make a final drilling decision until July next year.
Drilling could potentially be undertaken by 2012.
At the New Zealand Petroleum Conference in Auckland yesterday, OMV New Zealand exploration manager John Anderson told delegates corners had to be cut and some sequences of work were compromised, in order to reach targets within the present five-year timeframe.
Because of the large area to be covered in the Great South Basin, OMV supported the review of the Crown Minerals Act.
A conventional five-year permit was too short for a modern exploration programme in large frontier areas, he said.
A work cycle to drilling status could take up to eight years in those areas, he said.
He estimated a lead-in time of 18 months to 24 months for getting a drill rig in place, with a heavy duty semi-submersible rig required for the 1000m depths.
Dual-listed L&M Energy, which raised $10.1 million capital, was focusing its exploration efforts at Ohai in Southland where it had begun a $2 million pilot programme to test flows of coal-seam gas, having spent about $30 million on southern exploration.
L&M business development manager Dr Chris McKeown said both commercial customers, including Fonterra and Tiwai Point aluminium smelter, and residential customers could utilise coal-seam gas.
It was already in a joint venture to potentially replace diesel use with a large southern trucking firm with more than 700 vehicles.
While holding New Zealand's first certified coal-seam gas reserves, with an estimated 173 petajoules of energy, Dr McKeown was not yet ready to estimate how much gas was required for commercial viability.
• Reporter Simon Hartley is hosted at the conference by Crown Minerals.
