Government adds $20 million to search for oil and gas

11.30am - By KENT ATKINSON

The Government is investing over $20 million in boosting the search for new deposits of oil and gas in New Zealand.

It will contribute $3.6 million a year for six years to its science company Geological and Nuclear Sciences Ltd (GNS) to identify regions with petroleum potential which could help attract new exploration companies to New Zealand.

GNS has a team of 30 scientists looking specifically at the petroleum potential of sedimentary basins and previous years' research has been built into a huge database that has underpinned many of the earlier oil and gas discoveries in New Zealand.

A leader of the GNS petroleum research, Peter King, said today that the new work was aimed at developing a four-dimensional computer model of New Zealand's sedimentary basins.

"It will show thickness and depth of burial of rock strata likely to contain oil and gas, and how factors affecting the evolution of petroleum accumulations have changed through geological time," said Dr King.

The new data is expected to improve prediction of the presence and type of oil fields.

Geologists believed that although Taranaki was New Zealand's best-understood sedimentary basin, it had only been lightly explored, by overseas standards.

"Based on known field sizes and geological assessments, we believe that considerable volumes of oil and gas have yet to be discovered in Taranaki," Dr King said today.

"Some industry commentators believe New Zealand needs three times the present level of exploration intensity to ensure we have enough new reserves of natural gas once the Maui field depletes."

Energy supplies -- particularly those based on fossil fuels such as oil, gas and coal -- have become controversial as the big Maui gas field starts its final stages of production.

New Zealand is currently only 31 per cent self-sufficient in oil, and spends about $7 million, in net costs, daily on oil imports.

About 85 per cent of local oil production -- valued at $670 million in 2001 -- is exported because the local oil is too light to be refined at the Marsden Point facility, and is mostly sold to Australian refineries or on the world market through Singapore.

The current value of known reserves still in the ground is $11.5 billion worth of oil and condensate; and $5.2 billion in gas. About 30 per cent of New Zealand's total energy demands are met by natural gas, and Maui, the country's largest gas field, was previously thought to have enough reserves until 2009.

But a new report released in February said it could finish up as early as 2007, based on current demand. This new estimate -- called a redetermination -- triggered calls for the Government to urgently develop a strategic plan for energy.

Dr King said the new GNS research programme covered a mix of fundamental geological knowledge, big-picture regional evaluations, computer-based modelling, and solutions-based research targeted to industry needs.

The research will be of a type not normally undertaken by exploration companies.

"We'll work closely with exploration companies to identify special areas where our research efforts can be focused," Dr King said.

In the past year, exploration companies had spent $1 million for oil and gas consultancy work at GNS, which drew on expertise gained from Government-funded research and contributed toward finding new reserves, Dr King said.

Usually, only one exploration well in 10 was successful, and the GNS work reduced geological uncertainties to help avoid wasted drilling or surveys.

Dr King said good research on sedimentary basins and their petroleum systems had never been more important to New Zealand.

"The exploration sector is currently struggling to build the critical mass needed to ensure discovery of new reserves sufficient to offset the economic and social disruption that will be caused by the looming demise of the Maui gas field," he said.

There remained a strong focus on the Taranaki Basin, which is one of the world's best examples of a coal-sourced "oil and gas province" but knowledge gained in Taranaki would also be used for detailed evaluation in other regions.

New discoveries should be only a matter of time because New Zealand remained relatively unexplored and there were a lot of geological indications of petroleum in some areas.

There would also be a focus on two new offshore "frontier areas" northwest and southeast of New Zealand, and GNS would encourage the collection of new seismic data over other potential reserves in the licence areas of Regina, Canterbury-Bounty, and East Coast.

It would also try to assess how much frozen natural gas hydrates lay on the deep ocean bed -- a globally-recognised potential energy source which nobody has yet worked out how to mine.

- NZPA