Southern gas find would be top NZ boom

The Archer rig is being used on Maui A and is largely automated for enhanced safety. Photo supplied.
The Archer rig is being used on Maui A and is largely automated for enhanced safety. Photo supplied.
A significant gas find in the Great South Basin would provide the largest economic boom to New Zealand people would ever remember, Milford Asset Management senior analyst William Curtayne said yesterday.

Mr Curtayne, of Auckland, specialises in the resource sector and closely monitors the oil and gas sectors in both New Zealand and Australia, particularly the liquefied natural gas sector in Australia.

Liquefied natural gas plants being built in Australia ranged in price from $US15 billion ($NZ18.12 billion) to $US50 billion ($NZ60.4 billion). The latest one completed cost $US30 billion, he said.

A find in New Zealand would involve a facility somewhere in the middle of the range and would take five years to construct.

Shell New Zealand announced on Tuesday it would drill for gas in the Great South Basin, starting early summer 2016. Shell, along with its joint venture partners OMV New Zealand and Mitsui E&P Australia, had until tomorrow to make a decision on whether to drill for gas in their licence area off the coast of Otago.

Mr Curtayne said technology had improved significantly since the Maui gas field, off the coast of Taranaki, was found. Then, the gas was pumped into the domestic market.

Now, there was a large demand for gas from Asia, particularly China, and Europe, particularly France.

''These countries don't want to be too reliant on the Middle East or Russia for their gas. If Russia turns off the pipes, they run out of gas. They are looking for diversity. Australia is one major supplier and if they can get gas from New Zealand, that would improve their market.''

Although Maui was a large field, it was not large enough to contemplate building large liquefied natural gas plants, Mr Curtayne said.

A field would need to have a 16-to-20-year life to justify a facility - vast volumes of gas.

Some of the other considerations included the cost of getting the gas out, the value of the New Zealand dollar, oil and gas prices, and whether contracts for selling it could be locked in for the long term.

''But it can happen if the field is large enough.''

Shell was the industry leader of ''floating lng'', he said. Most gas was liquefied on land in large ''trains'', some of them as long as four football fields.

Shell was commissioning the first floating facility - a massive ship in the north west of Australia. The gas would be pumped on to the ship, liquefied, pumped on to another ship and taken to a customer.

If a large field was discovered in the Great South Basin, Shell would consider making a liquefaction facility on land or using a ship offshore, Mr Curtayne said.

Shell NZ chief executive Rob Jager indicated to the Otago Daily Times the cost of drilling the well could range between $100 million and $200 million.

Mr Curtayne said Shell would spend about $100 million proving the find, if it found gas, over about five years. Further drilling would entail a substantial amount of money and attract interest from other oil and gas companies.

Some companies would look for a joint venture with Shell and others would ''flock'' to the South looking for opportunities.

''This is one of the most exciting things we have heard. A big find of gas is very exciting.''

- dene.mackenzie@odt.co.nz

Pessimistic and laid back

raymondo and Mike: I think you both have valid points. There is a huge amount of pessimism and negativity in Dunedin that has the ability to hold the city back. I think these people are also just waiting for some utopian solution to the problems of the city. Probably something that is green or knowledge based but as yet undefined despite the fact the council reckons they have planned for it.

Wrong attitude

raymondo: I think that that's the wrong attitude, continually expecting someone else to solve your economic problems with a magic wand seems to be a Dunedin disease: a stadium will do it!, no a hotel!, a gas field!

These are all gravy, if they happen, if they work - if we want Dunedin to prosper we need to get off of our own backsides and do it ourselves - got a great idea? start a company, or help fund your mate's, or neighbour's idea - like our kids our successful companies keep growing up and leaving home - if we want more we have to make more, lots of them so that some of them will grow to be big and successful. If we don't our kids will keep leaving Dunedin and not coming back.

Continually expecting someone else to solve your problems with an economic windfall is a bit like expecting to be able to live off of that big lottery win you might get next week.

Like the hotel/apartment block, the stadium, etc oil exploration is a sideshow getting in the way of us knuckling under and digging our own way out of our economic morass - the mayor and the chamber of commerce should be spending more of their time and effort on actually doing something than searching the skies for pie.

Pessimism

Pessimism about future economic projects can be a self fulfilling prophecy. Let's wait until more clarification is presented about how the proposed testing goes for a start and we won't know that until next year... After that we can ask questions about how any gas will be distributed and who knows, we may have an economic benefit we did not expect.

That would be great!

I look forward to it!

A boon to Dunedin?

Unanswered questions - if they found gas offshore from Dunedin would we see it coming onshore? or would we simply see Shell place something like FLNG offshore as they are north of Australia. If the gas is being brought to shore would we actually see a benefit like the return of reticulated gas to Dunedin?

Given Shell's plan to build many of these vessels I think that we're more likely to see something like FLNG offloading to passing tankers at sea, tankers that don't put into port in Dunedin, than a  pipeline to shore - if so Dunedin would likely see little more benefit than helicopters carrying crews flying to Momona and buying coffees on their way out of town.

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