Oil find off Taranaki 'world class'

By PAULA OLIVER

A tenacious drilling programme has seen a joint venture strike oil off Taranaki - a discovery that some energy experts say could spur stronger international interest in New Zealand's prospects.

New Zealand Oil and Gas and its partners yesterday told the stock exchange that a rig drilling the Pateke-2 well, about 40km off the coast, had found a 13m oil column.

Effectively that meant the rig had hit some black gold after about two weeks of drilling.

The size of the field will not be known until more tests are completed in six to eight weeks.

But already NZOG and its partners are upbeat about the chance of Pateke-2 being developed.

"NZOG considers that it is likely that the field will rapidly proceed to development with a target of first oil production within 24 months," a statement to the stock exchange read.

The reason the field is looking such a likely candidate for development is that Pateke-2 is the third drill to hit oil in a tight area in a short time.

The success began last year with a discovery at the Tui well. Then, in April of this year, the joint venture struck oil again less than 5km away at the Amokura well. Now Pateke-2, 4km away from Amokura, has shown the same prospects.

Exploration manager Eric Matthews said yesterday that one of the key aspects of the Pateke-2 find was that the oil-water contact, or lowest known oil, was at the same depth as the Amokura well.

That indicated that the two wells, 4km apart, had drilled into the same pool of oil.

The other key thing was that the quality of the reservoir was excellent, which made it more likely that development would be economical.

"Basically it's world class.It's superb," Matthews saidof the discovery's quality.

The discovery sparked interest in NZOG's share price yesterday and long-time energy industry expert Chris Stone, a director of investment bank McDouall Stuart, said it could have wider repercussions.

"The real significance is that it's oil. It's fair to say that most people looking at the oil and gas industry in New Zealand, particularly from overseas, look at it and say it's gas prone."

What would attract them more than anything else would be the oil prospect that a developed find gave.

Stone said the joint venture had indicated that the Tui and Amokura wells would be worth between 10 million and 15 million barrels of oil each.

"They will have to be produced from separate wells," he said.

But the collective fields, which could essentially be produced as one, would be in the order of 30 million to 45 million barrels.

That was not enough to replace all New Zealand's imported oil but it would help.

Stone praised NZOG's tenacity.

"They are completing the most aggressive offshore drilling programme since 1970. They've really got the bit between their teeth."

NZOG shares closed up 7c to 76c.