The Gisborne district's economy is in for a boost as Canada-based Tag Oil Ltd moves into the next phase of its onshore oil and gas exploration work near Te Puia Springs on the East Coast.
It has had an injection of up to $100 million resulting from a partnership with the US-based Apache Corporation.
New Zealand chief operating officer Drew Cadenhead said the company planned to start doing intensive seismic testing here by the end of the year, which would immediately result in jobs for semi-skilled labourers.
Depending on the results of seismic data graphs, the operation would move to the next phase of test drilling, which would be even more labour-intensive, involving the creation of roads and platform sites.
"The initial phase will take a year or so,'' he said.
If all went well, the manpower requirement would increase significantly within two or three years.
Ultimately, if the tests progressed to extraction, it could generate hundreds of jobs.
"It will be good for the East Coast economy - we want to make sure that East Coasters will get first dibs at the jobs,'' he said.
But first the company would be seeking meetings with iwi and Gisborne District Council to make sure iwi, in particular, were engaged in the process.
Mr Cadenhead, who is based in New Plymouth, said he had already met with iwi leaders in Taranaki for guidance on approaching the correct contacts here.
The company respected the people of the East Coast and wanted to act in their best interests.
If things went to plan, the East Coast could expect to see similar benefits as Taranaki, where thousands of people worked in the oil industry _ generating great spin-offs for the whole economy.
On the East Coast, people would need to stay in motels, they needed to eat and they would need equipment _ all of which would be provided locally.
The first phase of the programme, starting this month, was to get a clearer picture of what lay beneath the ground by using geophones to record the energy waves reflected by the subsurface geology.
Depending on the results of seismic data graphs, drilling tests would start next year.
Similar work was being done in Hawke's Bay.
Tag Oil holds the permits for more than 1.7 million acres in New Zealand's East Coast Basin, which takes in the East Cape and extends right down through Wairarapa.
Two of the permits of interest, PEP 38348 and PEP 50940. are in this district. A third, PEP 38349, is in Hawke's Bay.
Tag had been in New Zealand for 10 years and had already done a lot of geo-survey work in this region, mostly with higher-profile partners, said Mr Cadenhead.
"The development is still in the early stages but we are pleased with this partnership with Apache, who have approved a large expenditure.
"We are pleased to be taking the next step,'' he said.
Apache was a big company that did not muck around.
One of the world's top independent oil and gas firms, Houston-based Apache will pay for the collection of two and three-dimensional seismic data in the basin in exchange for stakes in the permits.
It will get a 50 per cent interest in the permits after the three exploratory phases are finished and by committing to phase 4 operations (extraction).
If Apache commits to phase 4 operations, all costs will then be shared equally between Apache and TAG.
Subject to certain conditions, the planned exploration work programme will be conducted over the next four years.
Both the Gisborne and Hawke's Bay areas are known to have deeply buried oil-bearing shale formations.
"We like the prospectivity and the opportunity,'' Apache spokesman Patrick Cassidy said in a press release.
"It looks to be unconventional and we can bring value to those assets.''
Houston-based Apache is among US companies that have pioneered unconventional drilling techniques, having tapped into shale formations in Texas and Argentina in recent years.
