NZOG taking on Toroa prospect

New Zealand Oil & Gas’ deepwater exploration plans in the Deep South may be the last roll of the dice allowed before changes are made to the Crown Minerals Act. Simon Hartley looks at NZOG’s latest plans.

Offshore southern exploration company New Zealand Oil & Gas has moved to entirely take over the Toroa permit, lying deep in the Great South Basin, well south of Dunedin.

NZOG now hopes test drilling could be undertaken soon by one drilling rig or ship at both the Clipper permit off Oamaru, which hosts the Barque prospect, and Toroa.

Toroa had been 30% held by NZOG and the remaining 70% interest was held by Woodside Energy since 2013, but NZOG is to become the 100% holder, and permit operator, with no costs involved in picking up the permit.

Following the exodus of several major oil companies from New Zealand over the past two years, because of the high cost and weather risks of test drilling and low oil prices, NZOG is the last contender looking at southern, deepwater test drilling.

NZOG chief executive Andrew Jefferies said the Toroa prospect complemented the Clipper prospect, where the commitment date for that well had recently been extended to 2019.

``We intend to market these two potentially transformational prospects together.

``The economics of combining the prospects are more attractive,'' Mr Jefferies said in a statement.

Two wells have previously been drilled in the Toroa permit area, and while finding shows of hydrocarbons, they were not commercially viable, similar to more recent test holes drilled around Clipper.

Mr Jefferies said a 3-D ship-borne acoustic survey over the 1100sqkm of the Toroa permit, in early-2015, had identified prospects of oil and gas.

``We intend to complete a review of perceptivity in Toroa and finalise resource estimates,'' Mr Jefferies said.

To date, NZOG and Woodside had met their work obligations on the Toroa permit and had until April 2020 to make a decision to either test drill the prospect, or drop the permit altogether.

Mr Jefferies said the timetable aligned with the possible availability of drilling rigs suitable for working both the Clipper and Toroa permits.

``The [Clipper] extension will allow more time for new geological information that has come to light during discussions with potential farm-in partners,'' he said.

In a report for NZOG on Barque, released by Mr Jefferies last October, he said development of Barque could double New Zealand's current oil and gas production.

It was estimated up to $15billion in GDP and $32billion in royalties and taxes could be generated over the life of the field.

In total, there could be up to 5740 full time equivalent per year could be created during construction, and around 2000 enduring jobs in the region, thereafter.

NZOG had been reporting talks, but no details, with potential farm-in partners for more than two years now.

Despite the multibillion-dollar Ofer Group recently paying $84million to gain a controlling 67.5% stake in NZOG, it was not backing any test drilling, which could cost in a range of $US80million to $US100million.

Mr Jefferies said the two prospects had the potential for a ``transformational discovery'' of ``ethically produced gas'' which would help reduce carbon emissions by displacing higher carbon sources.

The Clipper prospect has in the past been estimated to have far more gas than Taranaki's offshore Maui gas field, which has been fully operational since 1979.

After NZOG's Clipper permit was extended, Oil Free Otago took Minister of Energy and Resources Megan Woods to task, over Prime Minister Jacinda Ardern's pre-election promises of reining in exploration for all fossil fuels.

Dr Woods defended her decision, saying not to have extended the permit could have resulted in a judicial review, under inherited regulations, but Dr Woods gave a clear sign changes are afoot, under a review of the Crown Minerals Act.

In November last year, GNS Science released new geological sediment data on the Great South Basin and Canterbury Basin, which was part of a four-year $2million effort to attract oil and gas exploration to New Zealand.

The new southeast province data, inclusive of Clipper and Toroa and 11 other earlier test drilled sites, covers 180,000sqkm of offshore territory.

The new combined southeast province data followed the 2016 release of northwest New Zealand data, beyond Northland. Data from three more areas is to be released by the end of this year, all part of GNS' overall Atlas of Petroleum Prospectivity project.

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