Kahili onshore gas field for sale

Bidders are being sought for Taranaki's onshore Kahili gas field, which was in production briefly six years ago.

Austral Pacific Energy operated the field for a short time in 2004 but production stopped shortly after when the well unexpectedly filled with water.

Energy and Resources Minister Gerry Brownlee said significant volumes of gas could remain in the area. The 5.99sq km block - on private land - includes the Kahili-1B well, which has been closed but not filled in.

"The area includes the gas facility and pipeline at Kahili wellhead, which makes the gas volumes required for commercial viability of the field very low," Brownlee said.

The Kahili field was discovered in November 2002 and had reserves initially estimated at 5 petajoules (PJ) or 4 billion cu ft of gas. At the time it was thought production could increase if more wells were drilled.

Crown Minerals says the field failed due to an aggressive water influx into the small reservoir compartment that was tapped by the production zone.

"Further hydrocarbon volumes are likely to remain in adjacent separate compartments of this complex Tariki sandstone reservoir."

A well placed further sidetrack could recover more gas condensate, Crown Minerals said. The block offer will close on May 3.

Last month the Government offered six new permits to drill for oil and gas in the Reinga Basin. That exploration block covers 105,230sq km of ocean and neighbours the Northland Basin, which is also open for bidding.

Crown Minerals said a 2009 survey indicated that all elements required for a working petroleum system were present over a large area.

"As this is a virgin frontier basin the major risks relate to the low level of geological knowledge so far determined for the basin. There are suitable structures and traps which warrant further, more detailed evaluation."