Plans for onshore oil and gas field

Wellington-based oil and gas company Indo-Pacific is planning to develop the new Kahili onshore oil and gas field in Taranaki.

The Canadian-owned exploration company said proven reserves of oil and gas appeared likely to justify developing the discovery.

"Kahili is expected to be in production by mid-year," it said yesterday.

"Gas pipeline tie-in and electricity generation options are being assessed to determine the best development strategy for this field."

Potential also existed for other gas or oil pools to be discovered and developed near Kahili, Indo-Pacific said.

More than 450 million barrels of oil and condensate and 7 trillion cubic feet of gas have been found in the region, about 30km southeast of New Plymouth.

But it is still relatively lightly explored, with just 200 or so wells drilled so far.

In similar-sized North American basins, it was common to see "hundreds of thousands of wells drilled", the company said.

Indo-Pacific has one of the biggest land holdings in the Taranaki Basin, close behind Shell.

Kahili-1B well recently flowed at 5 million cubic feet of gas a day, with between 150 and 200 barrels of condensate.

But Indo-Pacific is in a dispute with Greymouth Petroleum, a partner in the Ngatoro field, which includes the Goldie pool.

Indo-Pacific drilled Goldie last year on a sole-risk basis, paying for all the drilling costs, which meant then-Ngatoro partners Shell and New Zealand Oil and Gas would have to pay a premium to get back into the Goldie oil flows.

Last year Shell sold its 59.57 per cent interest in the area, including the Ngatoro and Goldie pools, to Greymouth Petroleum.

Greymouth believes it was entitled to a greater equity in the Goldie project, according to earlier statements from Indo-Pacific, which has disputed the claim.

The Goldie well is now shut in.

Hearings are scheduled in the High Court in Wellington during March and April to consider the claims of Greymouth Petroleum against Indo-Pacific's subsidiary Ngatoro Energy, the operator of the Goldie sole-risk oil well.

Ngatoro said it would defend the action and has lodged a counterclaim against Greymouth Petroleum for preventing and hindering Ngatoro in production of oil from the Goldie-1 well.

- NZPA