KEY POINTS:
New Zealand's oil resources are back in the spotlight after traces of crude were found on Stewart Island after an earthquake.
The event strengthens prospects of a significant oil discovery in the nearby Great South Basin offshore area.
The Government is tendering 40 exploration blocks in the basin
and has had interest from oil companies from around the world. Tenders for the blocks close on April 2 and bids are not expected until very near the deadline.
The oil seeps are believed to relate to a magnitude 4.8 earthquake 160km west of Stewart Island, which occurred on February 19 and appears to have reactivated oil seeps near Stewart Island that were noted by scientists in the 1980s.
Ministry of Economic Development chief petroleum geologist Richard Cook said: "We are encouraged the latest information strengthens the case for exploration in the area."
While the seepages did not indicate any particular size of oil deposits "the fact that natural oil has been generated out in the basin and seeped up there is encouraging".
"It's just reinforcing the fact that there's oil potential and not just gas."
The Great South Basin covers 362,000sq km of ocean off the South Island, in the so-called "Furious 50s" and "Screaming 60s". Those latitudes are renowned among sailors for the prevailing westerly winds that circle the globe and the presence of massive waves.
Winds in the region peak at more than 150km/h and exceed 36km/h about 40 per cent of the time, meaning that production vessels could spend as much as a third of the year idle.
Some of the permits on offer extend as far as 500km south of the mainland.
Eight exploration wells were drilled in the basin between 1976 and 1985, at depths of 60m to 880m. Three showed gas and light oil.
Prices then were too low to warrant development.
One of the more persistent stories surrounding the Great South Basin is that Hunt Petroleum, when drilling 50km east of Stewart Island during the 1980s, found a "gusher" but plugged the hole and kept it secret.
Otago man Brian Jackson published New Zealand's Lost Oilfields in 2004, which said that records of the oil strike were boxed up and flown out of the country.
Jackson claimed Kiwis working on the drilling rig were locked below "so that they could not witness what was floating on the sea". "The well was capped quickly," he said last year. "When [the rig] had moved away from the oil slick, the New Zealand crew members were unlocked."
His explanation of why they simply left was that the Hunt Petroleum executives were "pretty sour with how the NZ Government was treating them".
Crown Minerals has said the story is a myth.
- STAFF REPORTER, NZPA