Oil and gas spending soars

Shell has been drilling to see what further gas can be squeezed out of Maui.

Gas reserves revised up 31% as investment in exploration flows

Oil and gas exploration and development spending was up 7 per cent last year to almost $1.6 billion, according to the latest official figures which also show a big jump in gas reserves.

Rob Jager, chairman of the Shell Companies in NZ, says he welcomes "a diverse range of views" on drilling activities.

Gas reserves have been revised upwards by 31 per cent from 2012, and the remaining reserves at 2642 petajoules are now the highest in 13 years, the Ministry of Business, Innovation and Employment says.

Sustained drilling programmes at Maui and Mangahewa, as well as a number of well surveys at Pohokura and Kupe, have enabled a better understanding of these fields.

However, oil and condensate production was down because of an extended maintenance shutdown at the Maari oil field late in the year.

Major explorer and producer Shell says it is about to embark on a survey of the large New Caledonia Basin to the northwest of New Zealand as it continues preparation to drill in deep water in the Great South Basin, which is opposed by the Green Party.

Rob Jager, chairman of the Shell Companies in New Zealand said he "welcomed a diverse range of views" on drilling activities.

"We'll await what the electorate says and what then the subsequent governmental negotiations end up looking like," Jager said. "We invest not for next year but for the next 30-plus years."

Green Party energy spokesman Gareth Hughes said his party wanted to ban drilling in water 200m or deeper.

The party's long-term goal was to see all oil and gas drilling halted after the country made the transition to 100 per cent renewable electricity, electric cars and sustainable biofuels. Hughes said this would be over several decades.

Jager said Shell's own gas reserves had increased markedly although warned these can fluctuate sharply year on year.

The world-scale 3500pj Maui field is nearing the end of its life but Shell has been drilling to see what further gas can be squeezed out of it.

Proven reserves had increased from 79pj to 133pj while proven plus probable (2p) reserves had increased from 219pj to 446pj.

The company is using new side drilling techniques to unlock the bypass gas.

Its offshore Pohukura reserves had also been upgraded - proven reserves almost doubling to 942pj and 2p reserves up from 783pj to 1017pj. Exploration wells were also likely to be drilled near field Ruru 2 and Maui 8 later this year.

Jager said survey work in the 150,000sq km New Caledonia Basin was likely later this year too. Shell in collaboration with Niwa would use the research vessel Tangaroa to conduct a six-week scientific research programme to map the seafloor.

If it did result in a seismic survey marine mammal monitors would be on the vessel and the work would be halted if any whales or dolphins were spotted.

The numbers

• $1.6b — Oil and gas exploration and development spending last year, up 7%

• 2642 petajoules • Gas reserves revised up 31% from 2012, now the highest in 13 years