Government offers new oil and gas prospects

New prospects for finding oil and gas off the Taranaki coast are being offered by the Government, in a bid to help cash in on high world oil prices and growing demand for natural gas.

Associate Energy Minister Harry Duynhoven has announced the opening of exploration bidding for seven "blocks". This takes the total number on offer to a record 19.

Duynhoven said the blocks were in a well-explored region so he was expecting a high level of interest.

"Several of these permits are within close proximity to proven fields such as Kupe, Maui and Pohokura, and so the prospectivity of the region is already established," he said.

While most companies love to find oil the most, the depletion of the Maui gas field and increased prices for natural gas have made prospecting more worthwhile.

Big power companies Contact and Genesis are poised to announce plans to start importing natural gas in its liquefied form, to burn in their power stations.

Exploration companies bid a "work programme" to the Government's Crown Minerals unit, which decides who shall be given permission to look for oil and gas in a particular area.

The companies do not pay a lot of money to the Government, but instead make commitments to do work: such as seismic surveys or actual exploratory drilling.

The idea is that the company promising to do the most work gets permission, but this can also depend on how much money, or what kind of reputation, that company has.

In this latest round of blocks being offered, four of the seven have previously been allocated. They have either relinquished them after not going ahead with the work, or Crown Minerals has taken the areas back because of lack of progress.

When this has happened in the past, the blocks have been re-offered on a "first-come, first-served" basis, sometimes allowing the company that failed to do the work to get it back again.

Now there will be a competitive bidding process for relinquished blocks.

An announcement is due to be made next month on moves to get oil and gas exploration in the Great South Basin, a huge offshore region to the south east of Dunedin.