Todd in $113m drilling scheme

By CHRIS DANIELS energy writer

A $113 million oil and gas drilling programme was unveiled yesterday by New Zealand energy company Todd Energy.

Todd will participate in drilling eight wells in the Taranaki Basin during the next eight months. It will spend $26 million in what will be the company's largest programme of its 47-year history.

Other explorers, including Shell, Preussag Energie, Austria's OMV, Conoco from the US and the Japanese firm Inpex, will be spending a further $87 million on their explorations.

Most oil and gas exploratory drilling activities, being so risky, are joint ventures. The same companies often take varying stakes at different sites.

Todd managing director Richard Tweedie said Todd would probably look to sell down from its only 100 per cent venture, an exploration well onshore at Patea east.

Not all the eight wells in the programme will be looking for oil and gas. Some, such as two at the Pohokura field, are "appraisal wells" - drilled to ascertain the nature of a field already known to be there.

Announcement of the ambitious drilling programme will hearten those energy analysts who have warned of the risk of looming power shortages when the massive Maui natural gas field runs down.

Maui gas is used in thermal power stations to generate electricity and was heavily drawn on last year, when hydro lake levels were low.

Tweedie said Todd was confident about the prospects of the wells the company was about to drill.

"We are certainly hopeful that we're going to have something that will be value creating for us.

"The timing is appropriate and fortuitous it's come this way. It certainly fits in very comfortably with the urgent need to discover further oil and gas reserves."

Latest seismic projections have revealed that Maui gas will run out two years sooner than expected, in 2007 rather than 2009.

Offshore drilling will begin at the end of this month, when semi-submersible rig Ocean Bounty arrives in Taranaki from Australia.

The Ocean Bounty will drill three wells, including an appraisal well at the Maari oil field.

Todd is also drilling another two wells at the Kapuni gas and condensate field, of which it owns half.

Kapuni had produced gas and condensate for 34 years and is expected to continue to do so beyond 2020 at current production rates.

Tweedie said Todd was very satisfied with the McKee and Mangahewa oil and gas fields, bought from Royal Dutch/Shell in March.

The McKee field is the second largest onshore field in New Zealand and produces about 1.2 million barrels of oil and 7.2 billion cubic feet of gas a year.

The nearby Mangahewa field, yet to begin producing, had reserves of about 97 billion cubic feet of gas in January last year.