Oil and gas deposit estimates upgraded

New Zealand Oil & Gas has again upgraded its estimates of the oil and gas deposits in the deepwater Barque prospect, about 60km off the coast from Oamaru.

Due diligence on Barque is  under way with unnamed international oil companies having signed confidentiality agreements with New Zealand Oil & Gas (NZOG).

Elsewhere around the country interest in developing actual drilling programmes for oil and gas have largely evaporated, when oil prices initially plunged below $US40 ($NZ55.70) per barrel, making "frontier" exploration more of a financial risk. NZOG yesterday upgraded its Barque estimates, which in July last year were estimated to be the equivalent of 530million barrels of oil, which is at least double the size of the 1970’s Maui discovery off Taranaki.

NZOG said the Barque estimate had almost tripled, to 11trillion cubic feet of gas and 1.5million barrels of oil or gas condensate. When contacted for comment and asked if Barque was on NZOG’s "for sale" list, a spokesman said it was "very much [their] intention" to find a farm-out partner to be the operator.

"We are currently continuing in talks with major international potential partners who have signed confidentiality agreements enabling them to examine our data," the NZOG spokesman said.

The upgrade of the potential size of Barque was mainly directed at the international farm-out campaign,  he said.

The Barque prospect will be promoted at a major trade show in London next month, then at the New Zealand Petroleum Conference in New Plymouth, the spokesman said.

While Barque lies in about 800m of water, the actual prospect formation is in a depth range of 2500m — 3000m below sea level. NZOG holds a 50% operator stake alongside Beach Energy’s 50%.

The latest upgrade comes from analysis of a 3-D seismic survey completed in late 2013, which has shown three prospective drill areas in the overall Barque structure.

NZOG had studied several models for processing the gas, saying the most likely was to develop a gas-to-shore LNG plant.

That type of facility could take in 8.2trillion cubic feet of raw gas, of which 4.8trillion could be converted to lng, processing 8.5million tonnes of lng and almost 600million barrels of oil condensate.

Last October NZOG concluded three months of negotiations with government permitting agency New Zealand Petroleum & Minerals to extend its exploration permit covering the deepwater Barque prospect.

The new conditions approved by NZPM pushed out the timeframe for NZOG to either commit to "drilling or dropping" the Barque permit to April 2018, and if a decision to drill was made it would have to be drilled by June 2020, NZOG said last year.

Following block offer 2016 by permitting agency New Zealand Petroleum & Minerals, just one onshore Taranaki permit was granted last December, to Todd Energy.

Shell’s New Zealand assets remain under a global restructuring cloud while Brazilian giant Petrobras, Norwegian explorer and producer Statoil and Mobil have all abandoned prospects in the past two years.

Last year Houston-based Anadarko dropped a Taranaki permit and more recently one off the Wairarapa coast, but is seeking a year-long extension to its deep-water permit off Oamaru, and retains an interest in the New Caledonia basin, northwest of Northland.

NZOG is at present looking to make a $100million return to shareholders, having sold off stakes in some assets, while it looks at acquisitions elsewhere.

Most recently NZOG sold its 27.5% stake in the Tui area oil fields off Taranaki to Malaysian based Tamarind for $US750,000. NZOG had earlier sold its 15% stake in the Kupe oil and gas fields to Genesis Energy for $168million.

simon.hartley@odt.co.nz

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