A crucial decision by oil giant Exxon Mobil is expected soon on whether it will participate in a total $1.2 billion oil exploration programme in the frontier Great South Basin during the next five years.
Confirmation of a decision of some form of a test drilling programme would be welcomed by Otago and Southland businesses, which for the past two years have been talking up the potential for tens of millions of dollars in associated work.
However, the reality is the deep-water storm-prone Great South Basin is one of the most challenging and expensive areas in the world to undertake test drilling for oil and gas.
An Exxon representative was contacted yesterday and was aware of the widespread speculation, but declined to comment on the likelihood of an imminent announcement. However, two Government sources understand it may be October 10.
Masses of hydrographic data has been collated by seismic vessels for Exxon Mobil (90%) and Todd Exploration (10%) in one consortium, and another headed by Austrian-based OMV New Zealand Ltd, since the pair jointly announced in July 2007 they had gained five-year permits for six of a total 40 blocks in the Great South Basin - covering 90,000sq km of the basin.
An OMV spokesman was contacted yesterday and confirmed its seismic data was still being analysed, but there was no update on its decision to test drill, or drop the permit, which must be made by July next year.
The separate consortiums were touted at the time to want to spend $1.2 billion in exploration, but the first hurdle to clear is whether preliminary seismic data is encouraging enough to prompt a test drilling programme, which has to be undertaken by Exxon by October next year. Hydrographic exploration began in late 2007 with seismic surveys by the vessels Discover 2 and Western Trident, the latter collating data covering 1200sq km for Exxon.
Industry sources said last year that Exxon's hydrographic survey work had provided very encouraging results and Exxon, the world's largest non-government oil company, had firmed up an option to bring an oil-rig to New Zealand within a year for a test-drilling programme.
Expenditure on onshore and offshore petroleum exploration and prospecting permits rose to $314 million in 2008 from $200 million in 2007, the Ministry of Economic Development's 2009 energy data file on Crown Minerals website said.
In 2008, offshore drilling continued at a high level of 18, two more than the 16 wells drilled onshore, and one more than the 17 offshore wells drilled in 2007.
The quantity of 2D offshore seismic acquired continued to expand again last year as both Crown Minerals and explorers contributed to a 78% rise with 25,749km of data collated in 2008, up from 14,424km in 2007.
The Great South Basin has not attracted major companies to the area since Hunt Petroleum in the mid-1980s.
Between 1976 and 1984, the area was explored by Hunt, Phillips, Placid, Occidental, Husky and Ultramar with eight test wells drilled, of which three had gas and oil shows, but none went beyond the initial test drilling phase.
• The OMV consortium includes partners PTTEP Offshore Investment, of Thailand, and Mitsui Exploration and Production Australia, of Japan and is expected to make a drilling decision by mid-2010, while Greymouth Petroleum has a permit to explore in shallower areas.
