$100m test well planned off Dunedin

An announcement Anadarko is set to drill a $US100 million test well off the Otago coast in January is good news for a Dunedin economy ''struggling for jobs'', Otago Chamber of Commerce president Peter McIntyre says.

The Texas-based company said yesterday it would be drilling a deep-water test well 60km off the coast of Otago Peninsula at the bottom of the Canterbury Basin.

Mr McIntyre said the announcement was ''really positive news'' for the Otago economy.

If it did strike large amounts of gas or oil, it would give engineering and other industries a big boost, he said.

Dunedin needed to put its ''best foot forward'' as a base for the company if drilling was successful.

However, both he and Dunedin Mayor Dave Cull emphasised it was early days yet and it remained unknown whether anything would be found.

''I have had conversations with New Zealand Oil and Gas, [Shell and Anadarko] and it keeps coming back to how big whatever they find is,'' Mr Cull said.

Dunedin's proximity to the proposed drill area would be a ''positive'' when it came to the company choosing which city would be a base, he said.

Anadarko corporate affairs manager Alan Seay said drilling the about $US100 million ($NZ129.358 million) well would take between 50 and 60 days and be carried out by the just-built oil drilling ship Noble Bob Douglas after it completed drilling off the Taranaki coast.

The exact location had yet to be chosen, but it would be at a depth of 1100m, Mr Seay said.

It had planned to drill in the area in the past two summers, but was unable to because of a global shortage of drilling rigs. After earlier looking at drilling up to two test wells, it had now settled on one.

Asked about the chances either oil or gas would be discovered, he said: ''When you spend $US100 million to drill, it shows a reasonably strong commitment, a reasonably strong expectation, but the odds are always against finding something.''

It was more likely that natural gas would be found than oil, but this would only become apparent after drilling.

The ''discovery phase'' would not bring much in the way of jobs to Dunedin, but the drilling ship, which would have about 200 staff on board, would be re-supplied from Port Chalmers.

If it did strike oil or gas, the next step would be to run an appraisal drilling programme over ''several seasons'' to get an idea how big the discovery was and whether it was worth going into production. This process could take about five years.

It was yet to be decided whether Dunedin would be chosen as a base of operations if production went ahead, but the city's proximity to the drill site would be an advantage.

It accepted some would be opposed to drilling and their right to protest, but the company would make ''no compromises when it comes to the safety of the environment and personnel''.

''As with any field of human endeavour, things can go wrong, but Anadarko has an excellent track record as an operator in this regard.''

Despite not being required to, it had lodged an environmental impact assessment for the well with the Environmental Protection Authority.

Cr Jinty MacTavish said drilling of the Otago coast was ''negative'' because any oil or gas find would contribute further to global warming.

''Any additional fossil fuels that we find and that we burn as a globe is significantly reducing the hope that we can have a South Dunedin that isn't under water for example.''

She was also concerned about the risks of an oil spill and was ''uncomfortable'' with the fact the well was ''quite deep'' and in rough water.

Anadarko had a 25% stake in the the ill-fated Deepwater Horizon well which exploded and sank in the Gulf of Mexico in 2010, to become the United States' largest environmental disaster.

- vaughan.elder@odt.co.nz

Drilling for oil
- Anadarko Oil exploration and production company based in Texas.
- As of the end of last year, had 2.56 billion barrels of proved oil equivalent reserves (BOE).
- Produced about 732,000 BOE per day last year.
- Employs more than 5300 people worldwide.
- Has been engaged in New Zealand since 2008 with exploration programmes in the Taranaki and Canterbury Basins.
- Has an office in Wellington.

Canterbury Basin
- A basin of about 360,000sq km, extending onshore from the Canterbury Plains out to an offshore region east of the South Island.
- Eight onshore wells between 1920 and 2008. Five offshore wells from 1970 to 2006.
- Has many similarities to the productive Taranaki Basin, with prospects for gas condensate and oil.
Source: New Zealand Petroleum & Minerals


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