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Nelson-based oil explorer Green Gate is abandoning some offshore parts of its prospects after a strategic review in the wake of collapsing oil prices and "disordered" equity markets.
Green Gate has relinquished prospects in Solander Basin, the Canterbury Basin and the offshore portion of a Canterbury prospect.
The onshore portion of a prospect that included area around the Kate-1 well drilled this year in conjunction with ASX-listed Gas2Grid, a Murchison prospect and the recently awarded onshore Taranaki licence have been retained.
Oil explorer Widespread Energy holds 11.8 per cent of Green Gate Ltd, which has most of its shares controlled by Stacey Radford, of Ruby Bay.
"The Widespread Energy board is disappointed at the withdrawal by Green Gate from three frontier exploration permits," said spokesman Chris Castle.
Radford said he had "high hopes" for Green Gate's first move into the Taranaki region.
It had already identified several prospects, including one of "drillable" status, in the Taranaki permit, north of the offshore Kupe field and abutting Origin Energy's Rimu-Kauri-Manutahi and Waihapa fields.
Green Gate also has access to NZ-based drilling rig NRG Rover, and planned to use that to drill the first well - within the next 15 months, Radford said.
Green Gate attracted controversy this year when independent Canadian oil and gas company TAG Oil Ltd announced it would no longer be drilling the Kate-1 exploration well 30km north of Christchurch. It alleged Green Gate "purported to cancel its agreement with TAG and revoke TAG's authority to explore".
Radford opted to drill Kate-1 after Wellington geological engineer Ian Brown told the Kate Valley regional landfill Environment Court hearing there was "widespread seepage of gas and oil from the subsurface over the area of the landfill".
Widespread Energy said Green Gate was its largest single investment, and the relinquishment of the three South Island frontier areas was a setback, "but not surprising in this new era of sub-US$50 oil prices".
Widespread Energy still held interests in the Kotuku oil seeps near Lake Brunner, offshore on west coast of the South Island, and a Chatham Rise rock phosphate project.
The company has claimed the seabed phosphate prospect 600km east of Christchurch may exceed 100 million tonnes.
The economics of mining the seabed will partly depend on the extraction costs.
- NZPA
