Chance of new NZ wells producing oil by January

By FIONA ROTHERHAM

The operators of the Rimu oil and gas find in Taranaki say there is a real chance three wells will be ready to go into production by January next year.

Australian firm Bligh Oil and Minerals, which has a 5 per cent interest in the Rimu field near Hawera, told the Australian Stock Exchange yesterday that preliminary results from the just-drilled Rimu B-1 appraisal well were extremely encouraging. The field was firming up as a significant commercial discovery.

The reservoir's quality was to have been confirmed by electric log analysis overnight. But Bligh chief executive Neil Malloy said deteriorating conditions prevented the logging tools reaching the bottom of the hole.

Operator and 90 per cent shareholder Swift Energy of Texas and its partners, Bligh and the Canadian-based Antrim Oil and Gas, decided to skip that step in the process although it would have yielded useful information.

"The bottom line was we didn't need to see those logging results to decide whether to go on to the next stage of putting in production casing within the next few days, as the shows so far have been so good," said Mr Malloy.

Production testing of the B-1 well should begin by next weekend.

B-1 is 2.4km south of the Rimu A-1 discovery well which produced test flows before Christmas of up to 1600 barrels of oil and 5 million cu ft of gas a day from the Tariki Sands geological zone.

Immediately after production testing of the B-1 bore, the rig will be moved a short way to drill the Rimu B-2 deviated appraisal well from the same pad. Mr Malloy said this well carried the least risk because it was roughly halfway between the other two.

The first two wells are to test the size and hydrocarbon bearing capacity of the field. A third well will be drilled this year to test the Kauri prospect. The cost of the drilling programme is about $US20 million ($46.9 million).

Mr Malloy said the big surprise has been the discovery of bigger quantities of oil in what was thought to be a gas-prone area.

"There have been a number of people who have looked at it and disregarded it for various reasons. From their technical interpretation, the boys in Houston have proven to be more right than anyone else."

Bligh is the only company holding ownership in all the permits between the Rimu discovery in the south and the Tariki-Ahuroa field 50km to the north.

Mr Malloy said it is estimated Rimu's flow rates could be about 2000 barrels a day.

While this is less than initial flow rates from the Taranaki oil-producing fields Waihapa and Ngaere, it is thought Rimu will yield more long-term, because its rate of decline will be much slower than the others.

World crude oil prices remain at a 10-year high and the Organisation of Petroleum Exporting Countries will come under heavy pressure from consumer nations to lift output quotas for the third time this year when it meets in Vienna this Sunday.