Drilling hopes for Dunedin

The man representing Dunedin in negotiations with oil exploration companies believes the city is well placed to benefit if two oil companies decide, in August, to drill off the coast next year.

Des Adamson, from the Dunedin City Council's economic development unit, said yesterday it was hard to know what Anadarko Petroleum Corporation and Origin Energy had found from the seismic testing it was doing.

"However, the feeling we're getting is that the quantities [of oil in the exploration area] look pretty reasonable."

The two companies announced in February they were considering drilling one hole 65km from Dunedin - at a cost of up to $100 million.

A decision would be made in August and a drilling rig could be sent south from the Taranaki coast next year.

Mr Adamson said Dunedin was already servicing survey vessels involved in seismic testing and the University of Otago was doing some of the analysis.

However, a decision to drill would boost the need for engineering services, catering, air transport and accommodation.

Mr Adamson believed if one company drilled, others would join in the use of the rig to explore other prospects in the South.

Along with representatives from Port Otago, the University of Otago and the Dunedin engineering industry, Mr Adamson has been liaising with oil-industry representatives in New Zealand over the past two years to ensure the city was considered as a base for the offshore exploration.

He said information held by the oil companies was "quite well guarded" and it was impossible to predict "what they might come up with".

He believed if oil exploration did start, there would not be a big oil-driven "boom" but a gradual build-up in activity.

The oil industry was driven purely by economics and the port closest to the drilling site - Timaru, Oamaru, Dunedin or Bluff - was likely to be the one that benefited most, provided it could meet the industry's requirements.

He said oil exploration near Dunedin could mean "quite a positive spin" for the city.

"But, we've got to demonstrate we really want them, which we have been trying to do.

"And I think they have been quite happy with what we have done so far," Mr Adamson said.

"What we've got here in Dunedin - we've got a whole host of stuff. We've got good engineering companies.

"We've got good service companies. We've got a great tertiary hospital. We've got a big airport close by, relative to some of the others.

"We're close to the main transport lines and there's good university facilities."

Drilling off the Otago coast would be a difficult prospect for oil companies that tended to opt for the easiest locations.

"They go for the low-hanging fruit first," Mr Adamson said.

New Plymouth Mayor Peter Tennent said oil companies usually made their decisions offshore after they had done their cost-benefit studies.

"But if you can do anything to encourage the good folk from the hydrocarbon industry into your community I would do it."

Mr Tennent regarded the industry as good corporate citizens and pointed to its funding of the city's aquatic centre, swimming programmes and Womad festival.

"The leadership, particularly in terms of health and safety, is second to none on the planet. They're good people."

Taranaki had become an engineering base because of the oil industry and a super-yacht building industry had developed "because of the people power that was dragged in because of the oil and gas industry".

The region had been insulated from the recession, to a certain extent, by the oil and gas industry and, in the past 10 years, had gone from ninth-highest family income in New Zealand to third-highest.

Venture Taranaki chief executive Stuart Trundle said it could take 10 years to bring a field into commercial production but first oil had to be found in commercial quantities.

He believed the first requirement of the industry might be "short-term high-quality" office space.

A spokeswoman for Origin Energy, whose New Zealand office is in New Plymouth, said the drilling operation off the Dunedin coast would be run by Anadarko Petroleum, which did not yet have an office in New Zealand.

She said it could choose to base itself close to its oil prospect in the South or near other oil companies, in New Plymouth.

Oil is New Zealand's third-largest export earner behind dairy and meat.

Taranaki has:

• 90% of New Zealand's oil and gas jobs and income.

• $741 million of direct annual income from oil and gas.

• 817 oil and gas jobs.

• 2.66 further jobs for every oil and gas job.


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