A lifeline has been given to deepwater oil and gas exploration off Oamaru’s coast, explorer New Zealand Oil & Gas having successfully negotiating changes to its permit conditions.
Similarly, Houston-based Anadarko is also in negotiations to push out its permit obligations by a year to "drill or drop" its permit, also covering prospects offshore from Oamaru.
Since July last year, NZOG has been talking up the potential of the Clipper permit, which encompasses the Barque oil and gas prospect.
However, Norwegian oil giant Statoil yesterday announced a reduction in exploration and Shell has also reduced exploration, and could sell its estimated $1billion of New Zealand’s assets.
Those moves will be concerning for the pro-exploration Government, which until the oil slump had considered the oil and gas sector one of the cornerstones to economic recovery.
Government permitting agency New Zealand Petroleum & Minerals has renegotiated permit conditions with NZOG, and is doing the same with Anadarko, which will at least keep explorers in the region and signals a new degree of flexibility to the wider industry.
NZOG acting chief executive Andrew Jefferies yesterday reiterated the "best estimate" of prospective resource at Barque was the equivalent of 530 million barrels of oil.
"This is equivalent to at least twice the amount of producible gas in Taranaki’s Maui discovery, which has been in production since the 1970s," Mr Jefferies said in a statement yesterday.
He confirmed NZOG had concluded three months of negotiations with New Zealand Petroleum and Minerals to extend its exploration permit covering the deepwater Barque prospect off Oamaru’s coast.
He said the new conditions approved by NZPM pushed out the timeframe for it to either commit to "drilling or dropping" the Barque permit to April 2018.
If a positive drill decision was made it would have to be drilled by June 2020, Mr Jefferies said.
NZOG has a 50% stake in Clipper, which encompasses the Barque prospect, and is the operator, while Beach Energy holds the remaining stake.
"The joint venture is in talks with potential farm-in partners that have the scale and capability to operate a large prospect in deepwater," Mr Jefferies says.
Anadarko New Zealand corporate affairs manager Alan Seay confirmed when contacted the company was still negotiating with NZPM over pushing out its "drill or drop" decision date from next January to January 2018.
"We’ve asked for an extension and possibly expect to hear about it [the decision] by the end of the year," he said.
Anadarko was still analysing seaborne seismic data it gathered over two blocks off Oamaru in 2015, but was not planning any further seismic work this summer, he said.
In 2014, Anadarko spent about $400million test-drilling off Taranaki and Oamaru, but made no commercial discoveries.
Separately yesterday, Norwegian oil giant Statoil has quit oil and gas exploration off Northland and is instead focusing its efforts on the North Island’s lower east coast. It has seaborne seismic work pencilled in for coming months.
Last month, Energy and Resources Minister Simon Bridges opened the 2017 "block offer" for tendering, acknowledging the sector was facing tough times with low oil prices, but stated the Government remained committed to "providing a stable and predictable regime".
During 2013-14, Statoil was awarded two exploration permits for the Reinga Basin, about 85km off Northland’s West Coast of Northland, but this week it surrendered them.
The future of Shell’s New Zealand assets and operations remains under a cloud, after it announced the asset review in December and in August appointed investment bank giant JPMorgan to support any sales process.
Statoil has a 50% stake in a permit it shares with Chevron on the North Island’s southern east coast, with seismic work scheduled for the area over summer.
Statoil New Zealand country manager Brynjulv Klove said there may be speculation over why Statoil was exiting the Reinga Basin permits, but the only reason was the company believed the probability of making a discovery was too low to justify continuing to search.
Oil and gas exploration
Update on New Zealand’s oil and gas exploration.
• New Zealand Oil & Gas gain permit extension, offshore from Oamaru.
• Norwegian-based oil giant Statoil surrender Northland permits.
• Statoil still to explore southern North Island east coast.
• Shell still not announcing outcome of NZ asset review.
• A year ago Shell pulled out of plans to test drill the Great South Basin.
• Anadarko seeking to push permit obligations out a year, to decide on drilling off Oamaru’s coast.
