in court in nz yesterday, page-2

Some BIG numbers being quoted here !! SALTY

Oil giant in fight for gas prospect
17 May 2006
By MARTA STEEMAN

A huge gas and oil prospect off the bottom of the South Island is at stake in a David-and-Goliath court battle.

ExxonMobil, the world's biggest oil company, is trying to get its hands on exploration rights in an area that may contain gas and oil worth up to $1285 billion.

The exploration permit in the Great Southern Basin was held by industry minnow Bounty Oil, but Government agency Crown Minerals has revoked the permit. It wants to offer other blocks in the area for international tender.

Australian firm Bounty is appealing against the revocation in the High Court at Wellington. It claims Crown Minerals acted unfairly and wants to stimulate interest in the basin from big players like Exxon, which made a profit of US$36.13 billion (NZ$58 billion) last year.

According to e-mails between Crown Minerals staff, read out in court yesterday, Exxon is interested in "a lot of acreage" in the basin and sees an opportunity for a liquefied natural gas plant.

An e-mail from Mark Webster, who was then Crown Minerals' chief petroleum geologist, said staff had a successful meeting last year with Exxon.

"It doesn't get much better than this," it said.

AdvertisementAdvertisementThe court was also read a sworn statement from Bounty managing director Tom Fontaine, in which he considered the basin had reserves with a gross value of US$800 billion (NZ$1285 billion).

New Zealand petroleum industry spokesman Mike Patrick said late last year that the Great South Basin made the North Sea look like a millpond. It was "seriously wild territory for the dedicated oil men".

Crown Minerals is defending the permit revocation on the grounds that Bounty has failed to meet the work programme of processing seismic data and drilling a well, all of which are conditions of the permit. Bounty says it made reasonable attempts to do so, as required under the permit, and non-compliance was outside its control.

Alan Galbraith, QC, for Crown Minerals, said Bounty did not have the financial resources to drill in the Great South Basin and hoped to attract a bigger partner if it held on to the permit.

The court was told Exxon had made hay from Bounty's difficulties. It had bought secret seismic data relating to Bounty's permit area, to which Bounty can no longer get access.

One of Bounty's partners, a British company, failed to pay for the data, which was later sold to Exxon.

A twist to the tale is that Exxon and Crown Minerals will face off in court later over another dispute. Exxon is seeking a declaration from the High Court that it does not have to give the secret seismic data to Crown Minerals.