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New Zealand Oil & Gas will next month start looking for oil next to the Kupe field off the coast of south Taranaki.
The company says it will spend between $1 million and $2 million collecting new seismic data and reanalysing existing information for the area which covers 3000sq km.
Under the terms of the exploration an evaluation programme is to be carried out in the first two years with a decision on drilling an exploration well to be taken at the end of the second year. The survey vessel Pacific Titan would shoot 500km of new 2D seismic over about a week.
The vessel has been working in Taranaki and the Canterbury Basin during the past year.
Although the company would not release any estimates of what potential the area holds, chief executive David Salisbury said "regional analysis of source zones and the proximity of Kupe indicates that there is a favourable chance for oil or wet gas".
Rough estimates from the preliminary mapping indicated the potential for up to six structures ranging from 10 to 100sq km in size.
The area had structures not considered in Taranaki before.
It contains a "fairway" of structures about 2000m below the seabed NZOG has labelled the Gamma prospects.
Similar oil bearing structures are known to exist in the Sacremento Valley in California and in the Gulf of Mexico.
NZOG chief executive David Salisbury said the company was keen to get the work programme under way.
"At this early stage is the Gamma prospects are a very welcome addition to NZOG's exploration portfolio," Salisbury said.
The company has a 12.5 per cent stake in the Tui oil fields, which has yielded it more than 2.5 million barrels during the past 18 months.
It has a 15 per cent stake in the Kupe gas and oil project, due to come on stream later this year.
A spokesman said the company said if the area went into production it would not be for another five to seven years, meaning relatively low oil prices had no bearing on plans.
The falling price of oil had some benefits.
Marginal projects overseas were now being deferred so freeing up equipment, he said.
NZOG has built a 15 per cent stake in Tui field partner Pan Pacific Petroleum.
