KEY POINTS:
Australian-listed Origin Energy has confirmed it will spend about US$50 million ($71.2 million) on a "high risk" one-hole offshore test drilling programme for oil and gas about 65km off the coast of Dunedin.
Origin, one of the country's largest gas and oil explorers, has already completed a hydrographic seismic survey of the Carrack and Caravel prospects covering about 300sq km in the designated southern point of the Canterbury Basin.
The prospect area is about 35km from the Galleon 1 prospect, drilled by Shell BP Todd Canterbury Services in 1985, which found gas and oil but was capped as commercially unviable at the time.
Origin manager of investor relations Angus Guthrie said from Australia the programme was considered high risk but with potentially high rewards.
The Carrack and Caravel structures were estimated to contain possibly 750 million barrels of recoverable oil or 2700 petajoules of recoverable gas and 500 million barrels of associated condensate.
"Should hydrocarbons also be trapped in the lower Kawau Sandstone reservoirs, recoverable hydrocarbon volumes could more than double," he said yesterday.
Origin has a year from August 21 to drill its permitted area but has not yet contracted a semi-submersible rig for the job and is looking for partners with permits in the area to share rig costs.
Depending on where a rig was towed from, it could cost US$5 million-US$10 million for each leg to tow to and return from New Zealand, and possibly up to US$50 million for a month-long drilling programme.
Guthrie said while drilling at a depth of 1000m offered some technical difficulties, it was a common global practice and "would not be pushing any [technology] boundaries".
Origin's programme follows that of Australian consortium Tap Oil and Australian Worldwide Exploration's efforts which brought the first oil rig to southern waters in about 20 years in late 2006.
However, the Ocean Patriot capped the well 21km off the North Otago coast as commercially unviable.
Guthrie said it was too early to speculate on how any gas or oil find would be managed, but could include options such as a floating offshore platform and pipeline to shore, or the increasingly common rig-to-supply ship transfer for delivery to an overseas refinery.
Origin, which owns 51.4 per cent of Contact Energy, holds the largest acreage of offshore permits in the country.
Results are still pending from hydrographic surveys over prospects held by separate consortiums Exxon Mobil and OMV NZ of Austria in the Great South Basin, who in July 2007 took up 6 of 40 permits between them in what could amount to $1.2 billion being spent on exploration during the following five years.
- OTAGO DAILY TIMES
