Murchison to be tested for oil bonanza

Tests beginning next week could reveal whether a large tract of Murchison is sitting over lucrative oil and gas reserves.

Greymouth-based geologist Dr Murray Cave, of Western Exploration Ltd, said his company was ready to begin re-entry operations on the Blackwater I well near the Murchison township.

Initial testing undertaken by Western Exploration indicated the well had moveable oil and associated gas at a shallow level.

Dr Cave said the objective now was to install a "plug" below the production zone to ensure long-term well stability.

Blackwater I was originally drilled in 1968 by the Australian Oil Company of Texas and good quality oil and gas was discovered. But the well was abandoned due to the combination of equipment limitations, and the find being too small to meet the Texans' commercial objectives.

In 1970, the Bounty Oil Co sunk another well farther to the south but ended up off target. Fifteen years later, Petrocorp drilled the Matiri 1 well in the Matiri Valley to produce minor gas reserves, and more recently a small American company, GEL, started work in the Murchison area without much luck before the Ministry of Economic Development withdrew the permits.

Dr Cave said the re-entry would be followed by a pump test.

"As is always the case, it is not possible to determine the reserves until after the well is re-entered and tested, but Western exploration intends to apply for an appraisal permit -- an interim level between an exploration and mining permits which allows for an extended period of evaluation of a petroleum discovery -- over the area as soon as possible."

Western Exploration holds a petroleum prospecting permit over the southern half of the Murchison area, including Blackwater 1.

- NZPA