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NZ Petroleum Conference - highlights - Part 3

By Neil Ritchie

The latest Petroleum Blocks Offer, launched by Energy & Resources Minister Judith Collins at the NZ Petroleum Conference 2017 held in New Plymouth during March, contained few surprises.

Much of the 481,735 square kilometres that the government’s New Zealand Petroleum and Minerals (NZPAM) unit is opening up is once again in the frontier regions considered the most prospective for petroleum. This includes acreage in the Deepwater Taranaki, Northland-Reinga, Pegasus, East Coast, Canterbury and Great South geological basins. And, once again, this is essentially all offshore. 

And, as always, presently unallocated parts of offshore and onshore Taranaki – the country’s only proven petroleum province – are up for grabs.

However, the government is also opening up sparsely explored Southland, the first time such acreage has been included in a blocks offer.

“The Southland Basin is an onshore basin that is considered to have very similar geological characteristics to the Taranaki Basin and has been lightly explored for oil and gas . . . (and) current market conditions favour relatively low-cost onshore opportunities such as the Southland basin,” said Ms Collins.

As well, there is some shallow water acreage being offered up just off Hawke Bay.

The latest blocks offer follows extensive consultation with 146 iwi and hapū groups and 43 local councils and bids for the blocks that will close on September 6, according to Ms Collins.

And, as expected, Ms Collins was upbeat about the sector's potential, saying she expected New Zealand to continue to be well-placed to take advantage of the economic benefits of oil and natural gas exploration.

However, she did acknowledge the challenges the international industry is currently facing, with world oil supplies still exceeding demand and oil prices crumbling in recent years to a low of about $US30 per barrel though they are now trending upward to about $US50 per barrel or more.

The global sector was “having to downsize”, with a high level of merger and acquisition activity, particularly in New Zealand, though, the minister said this indicated a continued willingness to invest in the sector.

“The global exploration and production industry is cyclical - the low number of permits granted in last year's Block Offer reflects a significant downturn in the sector,” Ms Collins said, referring to the sole permit granted to perennial participant Todd Energy --- a 10-year onshore Taranaki licence inland of and east and south of New Plymouth.

A total of 45 new exploration permits have been awarded since 2012.

“However, activity in New Zealand and globally is expected to pick up as operator margins improve. The government will continue to ensure we reap the benefits of petroleum and mineral exploration while adhering to strong environmental and health and safety provisions,” she added.

The Minister said NZ's petroleum sector was small by global standards but nonetheless a significant contributor to this country’s economy. Between 2011 and 2015, oil companies invested $NZ7.7 billion in oil and gas exploration and production, while other parts of the economy also benefit from the sector's demand for goods and services.

And, she stressed that while New Zealand had 17 known petroleum basins, only Taranaki had so far produced any commercial discoveries, meaning “there is still potentially big potential (out there)”.

 

2017 Block Offer details here

2018 Block Offer nominations here