Strong interest in drilling tender round

By CHRIS DANIELS energy writer

The Government is reporting good competition for the right to drill for oil and gas in New Zealand, with strong interest in the latest tender round for Taranaki prospecting blocks.

Associate Energy Minister Harry Duynhoven said yesterday that 23 bids had been received for the 17 blocks being offered for exploration.

Bids closed on October 31 and the successful companies will be told in January.

Duynhoven said that a total of 17 companies had bid for the blocks on offer including four companies new to New Zealand.

The bidding round included nine offshore blocks and eight onshore blocks covering a total area of 12,772sq km.

Crown Minerals, a division of the Ministry for Economic Development, awards explorers the right to drill for oil and gas in the the different prospecting regions.

Only a minimal sum is paid to the Government for rights to drill, but those companies that promise the most ambitious exploration programmes in the quickest time usually win the bids.

Duynhoven said that the total value of the work programmes bid in the latest round was close to $200 million.

A condition of the latest blocks offer is that an exploration well must be drilled within four years. Duynhoven said that "many of the bids" received had involved drilling wells earlier than the required four-year time limit.

A popular bidding round is important to maintain confidence in the local exploration industry, after the withdrawal of industry giant Shell from the business in August.

Shell said it would stop bidding in Government tender rounds because there were better prospects elsewhere and it had drilled too many dry holes in this part of the world.

The Government received only one bid for one of the five huge blocks of deepwater prospects offered up for tender earlier this year.