Oil and gas thriving in NZ

2. 127-OMV-170814August 11, 2015

By Emma Brown

NEW Zealand has a long history of oil and gas exploration dating back to 1886.  Recently, the country has redefined the scale of the industry and its value to the economy, becoming a hub for extensive oil and gas field exploration and production.

Located 80km offshore New Zealand is the Taranaki Basin, the country’s largest oil and gas field and home to one of the biggest oil projects undertaken in the region to date — the Maari Growth Project.

The Maari project is a joint venture between OMV New Zealand (69 per cent), Todd Maari (16 per cent), Horizon Oil (10 per cent) and Cue Taranaki (5 per cent).

Developed by OMV New Zealand, in a water depth of 100m the recently completed project consists of the Maari field and two satellite fields, Manaia and Matariki.

These fields are tied-back to one of the most technically demanding wellhead platform installations in the Australasia region and the Raroa floating production storage and offloading (FPSO) facility.

The development of the Maari oil field was once deemed impossible due to the water depth, the distance from the course and the wax content of the oil.

Once OMV took over development, new technology emerged and the project was granted the first ever marine consent for offshore development drilling. Significant progress was made at the site, with first oil was extracted from Maari in early 2009 via a new downhole heating system.

The project has substantially contributed to employment in New Zealand; more than 110 full-time staff and contractors are required for the day-to-day running of its facilities alone.

Four wells were drilled for the project, with an investment of about $500 million with the aim of increasing reserves, production and recovery.

The project was successfully completed in July with first production from the final well (MR10)which was flowing about 2000 barrels of oil per day (bopd) for with daily production of about 16,500 bopd.

Joint venture partners Horizon Oil and operator OMV New Zealand expected total field production capacity to increase to 20,000 bopd with the optimisation of production from MR10 (the last of the wells to enter production) and an upcoming work-over campaign.

New Zealand Energy and Resources minister Simon Bridges welcomed the successful completion of the project.

“This is good news for OMV and for New Zealand,” Mr Bridges said.

“The National Government’s hard work in this area has delivered significant levels of exploration activity.  By necessity, the petroleum sector has a long-term view and – even with the current low global oil price – we remain confident that New Zealand remains attractive for those wanting to invest.

“The Government remains committed to developing our oil, gas and mineral resources in a sensible, safe and environmentally responsible way.”

 

The New Zealand oil and gas industry

New Zealand could offer enormous potential for future oil and gas discoveries and developments.

Today, oil and gas is produced from 21 petroleum licences/permits in the Taranaki basin.

Some of the most abundant fields are Kapuni, Maui, Pohokura and Kupe, while exploration for is being carried out in the Great South Basin and offshore areas near Canterbury and Gisborne.

Oil is New Zealand’s largest source of energy and is primarily exported while gas is largely converted into electricity and used in the domestic market.

New Zealand produced 35,500 bopd and 208 petajoules of gas in 2013; together they have contributed $1.5 billion in royalties to government coffers across the last four years.

In May this year Mr Bridges said the government would take a mixed and balanced approach to the country’s energy future in both renewable and non-renewable energy.

“We are a world-leader in renewable energy generation but the role of oil and gas should not be discounted. It is our fourth largest export, creates thousands of highly skilled, well-paid jobs and earns significant royalty revenues for the Government,” he said.

“With 17 underexplored petroleum basins in our exclusive economic zone, there are real opportunities to realise greater benefits for New Zealand.

“Oil is our fourth largest export, and brings in around $700 million each year in royalties and taxes.

“It is clear that companies are seeking frontier acreage and long-term opportunities like those which New Zealand has to offer, and this government remains committed to attracting major international companies to invest in exploration and development in this country.”

Job creation

A March report released by Venture Taranaki, Wealth Beneath Our Feet – The Next Steps, illustrated major growth for employment in the oil and gas sector.

These findings were welcomed by national industry body the Petroleum Exploration and Production Association of New Zealand (PEPANZ).

“The report shows that the number of jobs created by the oil and gas industry has increased from 7700 in 2010 to 11,720 jobs in 2014. That is more than an extra 4000 jobs,” PEPANZ chief executive Cameron Madwick said.

“The report also shows our contribution, as a sector, to the financial well-being of our country has increased from $2.5 billion to GDP in 2010, to almost $2.8 billion to GDP for the 2014 year.

“New Zealand holds a vast amount of petroleum potential. Over the last four years we have seen more interest from overseas companies, more investment and as a result have created more jobs and wealth for New Zealand.

“As an industry we still believe we have more to contribute and we are aware as we continue to grow we need to do so responsibly. We still have work to do to engage with the communities we operate in, to provide factual, reasonable information about our industry and to encourage a mature conversation about New Zealand’s energy future.

“If the findings of Venture Taranaki’s Wealth Beneath Our Feet – The Next Steps are anything to go by – further responsible growth of the industry could create busy towns up and down our country, more high paying jobs and wealthier communities. All we have to do is look to the wealth that lies beneath our feet.”

 

Exploration

In December 2014 the New Zealand government awarded 15 new oil and gas exploration permits, worth $110 million in committed expenditure on initial exploration, as part of its Block Offer 2014. Chevron NZ, New Endeavour Resources, Todd Exploration, Beach and TAG Oil NZ were some of the companies offered permits across the Taranaki, West Coast and East Coast basins and the Reinga-Northland, Taranaki and Pegasus basins.

“Block Offer 2014 has attracted three new companies to explore here, as well as expanded interest from local and international companies already operating in New Zealand,” Mr Bridges said.

“The award of exploration permits today is another important step toward unlocking New Zealand’s oil and gas potential, both on and offshore.

“The Government is committed to developing our oil, gas and mineral resources in a sensible, safe and environmentally responsible way.  Block Offer 2014 is delivering on that.”