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Energy Companies signal new activity

By Neil Ritchie

After a year of little offshore activity around the country, apart from several seismic surveys off Taranaki and the East Coast, two energy companies are now signalling some new drilling activity scheduled within the next 36 months or so.

Firstly, Shell Exploration New Zealand, operator and majority stakeholder in the offshore Taranaki Maui gas field, has applied again to the Environmental Protection Authority (EPA) for marine consent – this time to allow for “future drilling work” involving a jack-up rig. 

The EPA first granted a marine consent during 2015 for some exploration and/or maintenance work (well workovers) at the two Māui platforms. Now the Maui partners – Shell, Todd Energy and Austrian company OMV – want to do some further, presently unspecified, work using a jack-up rig.

Shell has so far declined to comment on the latest EPA application but options include scheduled maintenance shutdowns of the Mau A and/or Maui B platforms, future exploration drilling, including a possible re-entry of the Ruru wells or even the abandoned AD Ihi well. Some preliminary scoping work associated with the decommissioning of the field next decade may also be a possibility.

Any kind of programme involving a jack-up rig is likely to cost several tens of millions of dollars and last several months. It is understood the scheduled arrival of a jack-up is likely to be either late this year or early next and will be a “shot in the arm” for the offshore support sector.

Meanwhile, listed New Zealand Oil & Gas has commissioned and funded a regional economic impact report due for release mid-year. This study involves NZOG, New Zealand Trade and Enterprise and several unidentified corporate companies and could cost up to $NZ50, 000.

The study involves the options available in the event of a commercial hydrocarbon discovery in one of the most promising exploration licences NZOG currently holds and operates -- the strategic offshore Canterbury Clipper licence PEP 52717, in which NZOG and Aussie listed junior Beach Energy presently hold joint equal stakes. View here.

One option being considered by the study is utilising an offshore floating liquefied natural gas (LNG) processing plant in the event of a discovery large enough to make exporting product to energy-hungry Asian nations economic. This would likely cost more than a billion dollars.

Another option being considered by cash-rich NZOG is investigating the economics of constructing a sea floor-to-shore natural gas pipeline and an associated onshore processing plant in the event of a smaller discovery. This is likely to cost less than an offshore LNG plant but would still be substantial. It would also open up the possibility of gas being supplied, via pipeline, to potential buyers that include the South Island dairy sector and local industries as gas should be a more viable option energy source than coal.

In the event of a significant oil discovery, another development option could be the construction and utilisation of a floating production, storage and offloading (FPSO) vessel to process the liquids found for offloading into smaller tankers – as currently happens at the Maari-Manaia and Tui oil finds off Taranaki.

NZOG has until next April to make a decision to either drill an exploration well in the licence by 2020 or relinquish the Clipper permit. And NZOG is still hoping to attract at least one company to farm-in to the permit that contains the strategic Barque Prospect and which NZOG believes could hold up to 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil or condensate (light oil) in place across three potential producing horizons.

Given the relatively deep water off Otago, the risks associated with drilling in so-called frontier basins, and the likely high costs ($NZ100 million or more), only experienced offshore partners are likely to get involved in the Clipper permit.

 “It will be good if we are able to show commercialisation (options) to the prospective farm-in joint venture partners,” an NZOG spokesman has said recently.

NZOG also holds a 30 percent stake in the deepwater Toroa prospect, south of Dunedin, which Aussie major Woodside Energy operates with a 70 percent interest.