Pohokura gas field meets expectations

Shell's $650 million Pohokura gas field off Taranaki is on target to deliver its first contract volumes this year.

Pohokura's deputy project manager Milan Hendrikse said yesterday Shell and its partners, OMV and Todd Energy, were drilling the third of three onshore wells and would soon begin the first of six offshore wells.

"So far, the wells that have been drilled have come in within the expectation rates," Hendrikse told the New Zealand Petroleum Conference in Auckland. The first gas would flow in the second half of 2006.

New Zealand needs Pohokura's gas to make up for the earlier-than-expected decline of the Maui field, which has produced as much as 80 per cent of the country's needs since it began production in 1979.

Electricity generators Contact and Genesis and gas distributor Vector have contracted to take the first portion of Pohokura's gas and want more. Contact and Genesis are considering importing liquefied natural gas starting in 2011 if domestic gas finds are insufficient to meet demand.

"Our assets are at risk" without reliable long-term gas supplies, Dean Carroll, Genesis Power's energy trading manager, said this week.

Pohokura is the country's second-largest gas field. Shell and its partners said when the project was approved in 2004 that it might hold 42 billion cubic metres of gas, of which 20 billion could be recoverable.

The field's plant can process a peak 2.2 billion cubic metres a year and initial production was targeted at 1.4 billion cubic metres a year. The partners said they would review the gas reserves once development drilling was completed.

Shell NZ chairman Ajit Bansal said at the weekend that the initial wells might need to flow for six to nine months before the partners would know if there was sufficient gas.

Hendrikse said Pohokura's first production was planned from the three onshore wells and the first of six to be drilled offshore. Another three offshore wells would be drilled this year with the remainder in 2007.

- BLOOMBERG