More exploration urged as Maui field depletes

By FIONA ROTHERHAM

Exploration drilling for gas needs to be three times current levels in order to replace the depleting Maui field, says Fletcher Challenge Energy's chief operating officer, Lloyd Taylor.

He told delegates at the 2000 NZ Petroleum Conference that most New Zealanders did not realise that current known gas reserves were below the levels needed to ensure sustainability of the local industry.

Maui accounts for around 70 per cent of gas production, yet it was in the last third of its productive life.

Recent gas discoveries at Mangahewa and Kauhauroa on the East Coast had failed to significantly increase proven reserves, which now covered less than eight years' demand.

Annual exploration at an average four wells a year, and success rates of less than 10 per cent, were insufficient to guarantee a satisfactory outcome.

"Given the three to five-year lead time required for commercialisation and development of any major new gas reserve, three years is potentially all we have to find sufficient reserves to replace Maui."

A potential deterrent was the Government's energy policy and its approach to greenhouse gas emissions.

He said Fletcher Energy and its partners drilling the Pohokura well in offshore Taranaki should know by mid-year if the well was commercially viable. A decision on further testing would be made in the next week.

The partners were targeting potential gas reserves of 430 billion cubic feet within the Kapuni sands - one tenth the size of Maui.

He said drilling results were consistent or slightly better than that.

"A positive outcome from Pohokura and a couple of others would help change the dynamics of the industry and focus more world interest on exploration here. New Zealand would no longer be a backwater."

John Mork, head of Energy Corporation, which owns Westech Energy, said his company had spent around $60 million on exploration in New Zealand in the past five years with zero profits so far.

Westech and its New Zealand partner, Orion, had had success with gas finds on the East Coast at Kauhauroa-1 and Awatere-1 in northern Hawkes Bay.

It planned to drill another four to five wells in New Zealand this year.

One concern for growth of natural gas markets here was the relatively high transport cost, he said.

Natural gas transportation in the US per 100km was around 3c per 280 cu m of gas transported, whereas in New Zealand it was around 75c.