Critic welcomes uncertainty over oil

SLASHING EXPENSES: Exploration drilling at TAG Oil's Ngapaeruru-1 well, east of Dannevirke, before the rig was moved back to Taranaki.PHOTO/CHRISTINE MCKAY

TAG Oil's intention to relinquish it's East Coast acreages if it fails to find joint-venture partners is great news, a long-time opponent to oil exploration in our district says.

In a recently released report, TAG said one of its goals for the 2016 fiscal year was to obtain joint-venture partners for the East Coast and Canterbury acreage, or relinquish if unsuccessful.

"I'll be pleased to see them go," Weber farmer Donald James told the Dannevirke News. Mr James, a spokesman for Lock the Gate Aotearoa, said he always believed TAG's arrival in the Tararua would be a fly-in, fly-out operation.

"I had heard they'd taken their eight hidden security cameras from the Ngapaeruru-1 well, east of Dannevirke, six months ago. That was a pretty good indication they were out of here," he said.

And Mr James said he isn't too worried about the possibility of TAG finding a partner for its East Coast operations.

"I've no immediate fear and long may the oil price stay down. But if that well [Ngapaeruru-1] causes problems, who is responsible for it? After all, we've just had a 5.8 earthquake around here a week ago."

Toby Pierce, TAG Oil's chief executive, said in the report his company continues to maintain cash flow positive operations despite low oil prices.

"Our current break-even price for oil production remains at approximately US$38/BOE - well below the current industry average for similar conventional production," he said.

But TAG is reducing its 2016 forecast capital expenditures down from $23 million to about $13 million with $6 million already spent.

Tararua District mayor Roly Ellis said he hadn't heard anything about TAG's new plans.

"But we did get a warning a while ago they [TAG] were going to hold fire here. This news is pretty sad for the long-term future of exploration on the East Coast goes, but ... we've always known we couldn't rely on just one thing."

Mr Ellis said there are "things" which are going on behind the scenes to boost the economy of our district. "The main reason for our business hub was to grow the Tararua and help existing businesses to fare better. Whether it's training or mentors or helping make the right business connections. We're also working hard to bring more tourism to the district and attract all those thousands of people who go up and down State Highway 2."

And Mr Ellis said despite a price drop in this week's global dairy auction he personally feels the real doom and gloom of the dairy industry has lifted.

"Tourism is important for us and as soon as we get to Labour weekend we see more people travelling through."

In 2013 TAG Oil said its Ngapaeruru-1 well had encountered high shale gas readings, with indications of moveable hydrocarbons in the Whangai formation, but the drilling rig returned to Taranaki and the company didn't begin exploration at its second Tararua site at Te Uri.