NZOG signs deal to drill Tui prospect

By CHRIS DANIELS

New Zealand Oil and Gas says it will begin drilling for oil in its potentially lucrative Tui prospect in February.

The company will sign up with Bermuda-based Transworld Oil to share the costs of drilling its prospect, which lies to the northwest of the Maui natural gas field.

Delays in drilling at Tui have frustrated NZOG option holders in the past.

The company has said that finding a partner to help share costs and the lack of drilling rigs were responsible.

A semi-submersible drilling rig is now off the Taranaki coast, where it will be drilling exploratory wells over the next six months.

NZOG has taken advantage of the rig being in New Zealand to commission it to drill a well at Tui.

Company secretary Brian Roulston said the drilling, expected to take about 30 days, was designed to get to a depth of 3400m.

Known as the "D sands closure", the area is thought to be the remnant of an oil zone that once extended over the Maui field and Tui.

Geological changes allowed the oil in the original pool at Maui to escape, but NZOG hopes this did not happen further off at Tui.

It is estimating that there are 700 million barrels of recoverable oil in the Tui field.

Transworld will get half of NZOG's interest in the permit it owns, leaving NZOG with a 20 per cent equity interest in the Tui well.