Exploration of the Great South Basin (GSB), which fuelled southern economies with huge financial expectations, now comes down to Shell deciding to possibly drill one well, oil giant Exxon having departed the GSB 18 months ago.
Shell has taken over the operating interests in its joint venture oil and gas exploration operation with Austrian-based OMV, following the conclusion in March of four months of seismic surveying by specialist hydrographic vessel Polarcus Alima.
Shell retains three GSB permits covering a total 33,500 sq km of seabed, but there is no timetable on whether it will drill a test hole, or drop the permitted areas.
A statement on behalf of Shell's chairman of New Zealand companies, Rob Jager, said the first five-year exploration phase expires on July 10. Shell would then enter the second five-year period, but details for any potential drilling still had to be agreed with Government permitting agency New Zealand Petroleum and Minerals.
All the GSB seismic data collation has been completed and no more was planned.
"Although there are good indications in the area that natural gas could be present, a final decision on drilling an exploration well will be taken at a later stage," Mr Jager said in a statement yesterday.
The recent 3-D data is being processed, which will take up to the end of the year, and it might be one to two years before a decision on how to proceed could be taken, Shell said.
The survey ship was required by permit to get a minimum 2250sq km of 3-D data, but due to good weather it eventually logged 4820sq km. The 3-D data follows acquisition and analysis of 2-D data in 2007, 2008 and 2010.
There were four independent marine mammal observers aboard ship, and an independent environmental auditor, who logged more than 400 mammal sightings, which prompted postponement of surveying at times.
The southern GSB is one of 25 offshore and onshore oil and gas blocks which will be put out to tender this year by the Government for oil and gas exploration, under five-year permits.
In mid-2007, oil giants Exxon and OMV were separately awarded permits in the GSB but Exxon pulled out in October 2010.
In August last year, OMV and Shell announced a partnership to continue GSB exploration, valued at about $50 million.
Deep-sea oil exploration plans have triggered mounting environmental concerns, spurred by the Gulf of Mexico seabed oil spill in April 2010, after a drilling rig explosion.
Mr Jager yesterday stressed Shell's safety record in New Zealand, with 30 years of safe operating off Taranaki, and said operations demanded "no harm to people and [to] protect the environment".
• For exploration blocks outside New Zealand's 12 nautical mile limit, such as the Great South Basin and adjacent Canterbury Basin, the environmental consenting process will be managed by the Environmental Protection Authority.
The new legislation, covering the Exclusive Economic Zone, is awaiting its third reading in Parliament. It is expected the proposed offshore tender blocks will be covered by this legislation by year-end.
Shell in NZ
Great South Basin: 50%, operator for oil and gas exploration.
Taranaki: 83% joint owner/operator Maui field, Kapuni 50% and Pohokura 48%. The three fields deliver 70% of the country's natural gas.
