Exxon may bring oil rig to NZ

An oil rig is expected in the Great South Basin within a year. Photo from ODT files.
An oil rig is expected in the Great South Basin within a year. Photo from ODT files.
Oil giant ExxonMobil has rejected industry speculation it was considering bringing forward its timetable for oil and gas exploration in the frontier Great South Basin (GSB) in the Southern Ocean.

Oil industry sources have said, on condition of anonymity, that the hydrographic survey work done by ExxonMobil recently in the south basin had provided "very encouraging" results and Exxon had firmed up an option to bring an oil rig to New Zealand "within a year" for a test-drilling programme.

In July last year, five-year permits for six of a total 40 south basin exploration blocks were awarded to two consortiums; US ExxonMobil (90%), the world's largest non-government oil company, and Todd Exploration New Zealand (10%).

The other consortium is headed by OMV New Zealand Ltd, of Austria, and includes partners PTTEP Offshore Investment, of Thailand, and Mitsui Exploration and Production Australia, of Japan.

Exxon spokeswoman Rebecca Arnold, contacted in Australia, said Exxon representatives met Environment Southland and local iwi last week, as well as Government agencies in Wellington and Auckland including permit agency Crown Minerals, but Exxon was not bringing forward any programme.

"The meetings were a general update on the [seismic] data . . . which was only completed in April and only just sent to the company we are using to process it," she said.

The consortiums could spend up to $1.2 billion on exploration during the next five years - eclipsing any other area of interest in the country at present.

The exploration began last November with seismic surveys by vessels Discover 2 and Western Trident, which visited Bluff and Dunedin, the latter ship collating data covering 1200sq km for Exxon.

Ms Arnold said the full results of the seismic data might not be available to Exxon until mid-2009 and a decision on whether or not to drill might not be made until late-2009 or 2010.

The 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.

Many problems will be faced by the prospective drillers, aside from the notorious weather and potential for icebergs, drilling depths in the south basin are on average 750m but extend to more than 1200m.

OMV New Zealand was contacted for comment, but was unable to respond.

One of the eight wells drilled in the 1970s and 1980s, Kawau 1, found gas-condensate, and two others, Tara 1 and Toroa 1, had oil and gas shows.

The Toroa well had to be abandoned after an error in the drilling and recovery procedure.

In the same vicinity, Bounty Oil and Gas NL and Magellan Petroleum New Zealand held exploration permits, including prospects Mehrtens and Cullen which begin about 15km offshore from Kaka Point and the Tara, Toroa and Lomu prospects. Several were thought to contain a million barrels or more of oil, but despite plans to test drill the areas matters did not get past the seismic testing stage.

However, in late 2006, the oil rig Ocean Patriot spent about a month 21km off the Oamaru coast drilling a 3000m exploratory well that it capped and abandoned as not commercially viable.

The drilling was the first in the South Island since the 1980s and was undertaken by Australian consortium Tap Oil (the 40% shareholder), Australia Worldwide Exploration (25%), Beach Petroleum (20%) and Arrowhead Energy (15%).

• Late in July last year, junior oil and gas exploration company Greymouth Petroleum joined the multibillion-dollar consortiums, announcing its $23 million work programme covering two blocks in the south basin.

In contrast with the multinationals, Greymouth Petroleum will be exploring in shallower areas, where it already has experience, as opposed to depths of up to 1km in the consortium blocks.


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