Search on for seabed riches

By CHRIS DANIELS

The Ocean Patriot, a huge semi-submersible oil rig, has just started drilling a well off the Wairarapa Coast, as the local oil and gas exploration sector enjoys its busiest season for years.

It is thought to be the first time in decades that two drilling rigs are operating in New Zealand at the same time.

The well is being drilled 21km offshore by Australian exploration company Tap Oil, in partnership with US company Westech.

It is expected to cost about $15 million to drill. Taranaki, New Zealand's most lucrative energy province, is considered under-explored by world standards.

This means that exploration has not even really started in other parts of the country, particularly off the East Coast.

Associate Energy Minister Harry Duynhoven said that, because of growth in the economy and growth in demand and so a need for more electricity generation, any gas found would be unlikely to be "stranded" far from a user.

He said the arrival of the Ocean Patriot drilling rig was a vote of confidence in our frontier petroleum basins by international explorers.

"It's not been this buoyant since the 1980s. There is competition worldwide, but the good thing for us is that there is an opportunity to bring people in.

"We have a market where gas and oil is welcomed. As a result, people are interested."

This latest well, in what is called Tawatawa-1, is the first to be drilled off the Wairarapa coast since 1994.

The Government is trying to encourage more oil and gas exploration to fuel the nation after the Maui gas field runs dry.

Last month it waived a contentious tax rule for oil rig operators that had discouraged them from staying here for more than 183 days.

After this time, New Zealand tax was levied on the earnings of non-New Zealand workers. The waiver lasts until 2009.

A big gas discovery off the Wairarapa coast, while obviously good news, would also raise many tough - and potentially expensive - questions.

A power station could be built in the Wairarapa, where the gas could be turned into electricity, but this would also require upgrades to the powerlines infrastructure, so power could be fed into the national grid.