A 50:50 call by oil and gas explorer Shell on whether to go ahead with $200 million of drilling in the Great South Basin has been welcomed by Minister for Energy and Resources Simon Bridges.
Shell has run invitation-only community engagements in Dunedin and Invercargill this week, outlining to businesses and local bodies that it will make its decision before the end of the year. That could mean a drilling programme would be in place for the summer of 2014-15.
However, Shell has warned it calculates a 70% chance of failure and a 30% chance of finding gas. Any proven gas resource could take a decade to get to production.
''It is good news. The reality is we [National] are pro-development of New Zealand's mineral and petroleum resources,'' Mr Bridges said when contacted.
The country had the fourth-largest economic exclusion zone in the world, which contained 18 potential oil basins, he said.
''It is still early days for the Canterbury and Great South Basins.''
Mr Bridges understood new ''frontier'' areas such as the Great South Basin had to compete with Shell's other potential global tenements and the final decision to drill would be based on projected costs and potential returns.
Shell has said seismic data interpretation has now turned to assessing the potential volume of a southern gas field before its final decision is made.
Separately, US oil producer Anadarko is scheduled to drill two gas exploration wells off the coast of Oamaru during the 2014-15 summer. Shell is to spend almost $12 million on a 2-D seismic survey of another block recently acquired in the Great South Basin.
