The oil survey ship Discover 2 arrives in Dunedin to take
on fuel before looking for gas and oil reserves in the
Great South Basin in 2007. Photo by Stephen Jaquiery.
Shell, which is 70% of the way through assessing its $80
million of data on Great South Basin gas prospects, will
probably announce by mid-2013 if it will fund a southern
deep-water drilling programme.
Shell, while yet to make the drill decision, has said that
the earliest it would consider drilling the frontier Great
South Basin would be the summer of 2014-15.
It has raised its corporate presence in Dunedin in recent
months, undertaken environmental impact reports and will host
community group meetings next month, all of which may
indicate more than a passing interest in possibly drilling
one exploration hole.
Shell's New Zealand exploration venture manager, Roland
Spuij, was in Dunedin last week, attending an engineering
business cluster presentation on Wednesday. He had visited
less than a month previously with numerous offshore joint
venture partners to informally meet local government and
Mr Spuij said the ship-borne seismic data recently gained by
Shell, including 20,000sq km of 2-D and 4810km of 3-D work
costing about $40 million each, was about 70% processed in
Shell took over from Austrian company OMV as operator of the
Great South Basin permit, which has been halved to 16,715sq
km. Government permitting agency New Zealand Petroleum and
Minerals (NZPM) has granted a five-year extension to the
permit from July.
Mr Spuij said the first phase of processing is expected to be
completed by the end of January before moving into
high-definition processing, which will reveal ''high detail''
of the seabed at 1000m-1500m thickness.
This work is to be completed by end of February.
''We are almost 100% certain there is no black [crude] oil
there,'' Mr Spuij said.
However, of the two target prospect areas, one was ''quite
good'', with indications of gas and condensate, the latter a
sought-after very light oil which needs little refining.
By regulation, Shell has until January 2014 to formally
report to NZPM whether it will ''drill or drop'' the permit,
but Mr Spuij said Shell should be in a position by the second
half of next year to announce its intentions.
Earlier this week, Brazilian oil giant Petrobras relinquished
oil and gas exploration permits north of the North Island's
East Cape, largely to cut costs and resume exploration closer
However, its deep-water exploration intentions inflamed
Mr Spuij said the best prospect in the Great South Basin was
at 1300m deep, and a drill ship or semi-submersible was being
considered for one hole. Shell's preference would be use a
vessel under long-term contract for a series of holes,
incorporating targets in Australia, New Zealand, Indonesia
and other parts of Southeast Asia.
On the growing concerns of accidents in deep water, Mr Spuij
said Shell had done more than 100 deep-water holes, including
one of the deepest at 2100m in the Gulf of Mexico.
He highlighted that deep-water prospects had less sediment on
the seabed than closer inshore, meaning deep-water oil and
gas deposits were ''not in an over-pressured environment''.
Of further public interest is the pending Government
announcement of which companies have been successful in
tendering for new exploration blocks, and whether Shell will
feature in seeking new areas.
Shell has been tight-lipped for months on its plans and Mr
Spuij declined to comment on its intentions on any potential
interest in other block offers.
In preparation for the Great South Basin decision, Shell has
started an initial report on environmental health impacts
assessments and is due to begin a social and cultural
assessment shortly, with invitations to southern community
meetings later this month.
Mr Spuij said those meetings, in Invercargill and Dunedin on
December 19, would include local government representatives,
business groups, local iwi, environmental non-government
organisations and the Southern District Health Board.
Mr Spuij stressed the long-term nature of exploration, saying
if gas was found in a year's time during test drilling, it
could be a decade later, in 2023, before production began.
Shell is building the world's first floating liquefied
natural gas (flng) vessel, almost 500m long Prelude,
estimated to cost $US13 billion, which will be anchored off
Western Australia for decades to process gas to liquid at
sea, for transfer to delivery ships.
Mr Spuij said Shell expected to keep building a variety of
the flng vessels, which could potentially be used for gas
offtake in the Great South Basin.
• Last month, the Government announced details and locations
of the 2013 block offer tender which opens in April and
closes next September, which includes more blocks within the
Great South Basin and Canterbury Basin.