Maari oilfield partners face outlay of $320m

By Mark Reynolds

The partners in the Maari oilfield off the coast of Taranaki will have to spend up to $US175.6 million ($320 million) developing the prospect.

The potential development costs for the field are outlined in an independent report on the petroleum assets of Cultus Petroleum, which has a 30 per cent holding in the field.

The report is part of a valuation of Cultus put together by investment bank Grant Samuel and Associates. That report was prepared following a takeover offer for Cultus by Australian-based OMV.

The takeover report found OMV's offer of 66Ac (80c) a share was much lower than Cultus' fair value of $A1.04 to $A1.39 each.

A large portion of Cultus' value is now tied up in the Maari field. The field's potential has been assessed by Australian oil and gas valuation group PetroVal Australasia, although it has had to rely on Shell Petroleum for much of its information. Shell operates the field and has a 50 per cent stake in the prospect.

PetroVal said it was most likely that there were 190 million barrels of oil, of which 49 million barrels were likely to be recoverable. The Cultus share of that find would be 14.7 million barrels.

There was potential for the field to hold 281 million barrels of oil, of which 77 million barrels were likely to be recoverable, PetroVal said. Cultus would have a 23.1 million-barrel share of that find.

The first step was likely to be the purchase of a seismic survey of the field done by Geco-Prakla in 1998. That survey would cost $US3.5 million, according to PetroVal.

The survey will help the partners decide where to drill another appraisal well to confirm the type of structure they have discovered and the quality of the reservoir.

That well is likely to cost a further $US3.5 million and could be drilled later this year, along with another exploration well in the Pike area, south-east of Maari.

The big costs will be in extracting oil from Maari.

The cost of the development would be $US10 million for the appraisal well and a feasibility study, $US5 million for project management and $US69.4 million for wells and flow lines.

Subsea facilities would cost $US18 million and surface facilities $US45 million for a total of $US147.4 million. PetroVal said that if development costs ballooned because more wells were needed, then the total development could cost as much as $US175.6 million.

If the project is sanctioned by July 1 next year then oil could be flowing by January 1, 2002.