North Taranaki Mangatoa Gas Prospect Now Estimated at 3 TCF

An offshore north Taranaki gas prospect being evaluated for drilling by New Zealand Oil & Gas Ltd (NZOG) and Origin Energy could have reserve potential of as much as 3 trillion cubic feet of gas, NZOG said in its December quarter 2004 report.

NZOG said the Cretaceous Mangatoa prospect, in PEP 38478 along the coast south of Kawhia Harbour, could be larger than the 2 trillion cubic feet previously estimated.

The company said it was assessing options to drill a single vertical well offshore using a jack-up rig. Last year the company was considering drilling a deviated well from onshore to test the prospect.

The December quarter 2004 report said it may also be feasible to use a jack-up rig later in 2005 to drill the Felix prospect in NZOG's 75% controlled PEP 38729, which lies onshore and offshore immediately south of PEP 38478, Mangatoa. Australian-based Origin Energy, which has a 25% interest in PEP 38729, is now the majority shareholder of Contact Energy — the largest user of natural gas for electricity generation.

NZOG said the Eocene Felix prospect, a Kapuni C sands closure, is presently being refined through reprocessing of seismic data. As water depths over Felix are less than 50 meter, a jack-up rig was the most likely means of drilling.

In the West Maui area of offshore Taranaki a 3D seismic survey is planned for the Hector prospect in PEP 38483 (operated and 75% controlled by AWE New Zealand Proprietary Ltd) and PEP 38460 (operated by Transworld subsidiary New Zealand Overseas Petroleum Ltd) in which NZOG holds 15% and 12.5% interests respectively.

In PEP 38484, to the west of the Kupe gas-condensate field in offshore south Taranaki, and in which NZOG has a joint 50% stake with operator OMV New Zealand Ltd, reprocessing of seismic data covering Taitapa, a Miocene prospect, has been completed. Mapping of this shallow oil prospect is in progress.

On the Kupe gas condensate project (in which NZOG has a 15% interest) the company said in the December report that the assessment of environmental effects (AEE) has been completed and applications for resource consents notified. Details described in the AEE, such as the impact on marine ecology, air quality and archaeology, demonstrate minimal adverse effects of the Kupe development.

Suitable contractors have been pre-qualified for construction of the offshore elements: platform fabrication, platform installation, offshore pipeline purchase and offshore pipeline installation, and the engineering design necessary to go to tender, have been completed.

More financial detail on the Kupe development will be made available once a decision on the production station has been made — expected during the first quarter of 2005.

Negotiations are taking place with NGC to expand and provide the Kapuni gas treatment plant to process the raw gas and light oil. If suitable commercial terms can be agreed construction of a stand-alone production station would not then be required.

The Kupe joint venture has now set October 2005 as the target date for a final financial investment decision.

In the financial result for the half year, NZOG reported a small loss of $1.4 million for the six months to December 31, 2004, compared to a $2.8 million loss for the same period of 2003.

During the latest half year, the company invested $5.5 million in its key development projects: Kupe gas, Pike River coal and Tui oil.

NZOG has appointed Dr Stefan Kleffmann to the new position of manager, geophysics. Dr Kleffmann holds a PhD in geophysics, and was formerly with international petroleum consultancy RPS Troy-Ikoda.