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NZOG excited about oil shows found in Pukeko-1

MONDAY , 24 MAY 2004


New Zealand Oil & Gas (NZOG) said oil shows at its Pukeko-1 well may not have been as significant as initially hoped for, but the offshore well had filled a vital piece in the area's jigsaw.

The company reported "good" oil traces in a 7m column.

Pukeko is about 140km southwest of New Plymouth and 60km south of the Amokura-1 well where the company reported a 12m oil column last month.

NZOG exploration manager Eric Matthews said that while the find was in quite a narrow column that also needed to be substantiated by electric wire logs, "we're very excited".

"The likely scenario is that it may well be not of any economic value itself, but what is very important about Pukeko is that it is the first well in the area west of Maui where there has been what we call significant shows of oil, which proves that there has been oil expulsion and migration in the area."

"What that does is that it validates the whole play concept that we have been pursuing for years out there – it opens up a whole fairway.

"I think things have really moved along. We have an oil plate to chase out there."

NZOG estimates that the potential of the area west of Maui is hundreds of millions of barrels.

Mr Matthews said NZOG, which has 12.5 per cent interest in Pukeko, needed to see the drilling logs and integrate those with seismic data to come to final position.

"One has to say that a 7m log is not a lot – you'd be hoping for a bit more than that and we had expectations and hopes for something a bit bigger than that."

He said while there might be problems with individual prospects (and it may well be that there is a problem with the velocity gradient over Pukeko and the structure may be smaller than NZOG thought it was), "it's confirmation of the play and it is very important because it means we have a lot of other prospects to pursue here".

"Now we know that we can apply 3-D seismic technology out there and really get down. We need to define the structures properly."

Mr Matthew said that within a 100sqkm area west of Maui, a number of prospects had been identified by 2-D seismic tests but they had not been fully defined to the point where they could be drilled, because of the explorers' lack of confidence about the amount of oil.

"What needs to be done, now knowing that there is actually oil out there, is that we can get after it.

"I think it is going to be a spur to a substantial increase in exploration effort out here."

The Ocean Bounty rig drilling Pukeko will shortly move to drill the Takapau well northwest of the recent Tui discovery. Within two months it is expected to then drill NZOG's Pateke-1 well about 5km north of Amokura before drilling Kiwi-1 5km southwest of Amokura. (The Tui well is 5km southeast of Amokura.)

Mr Matthew said Pateke-1 and Kiwi-1 will further complete the jigsaw.

"What don't have is estimates of volumes of recoverable oil."

"We want to hook all those together as one development."

He said there was no question that Amokura contained "excellent rock".

"It's a beautiful reservoir.

Because it is a very flat area and relatively low relief, it is difficult to accurately map the size of the structure.

Results of the drilling programme should be known by early August.

Giving further spur to explorers has been soaring price of oil to over $US40 a barrel. Mr Matthews believes the Opec oil cartel has been effective in targeting a price of at least $US25/barrel and he doubts the price will ever fall below $US30.

"Oil prices may come back a bit, but it won't come down to $US20 again and you probably won't see $US30 again for some time, if ever."

Mitsui & Co also owns 12.5 per cent of Pukeko, Transworld Exploration and Production Inc, the operator, owns 45 per cent, Australian Worldwide Exploration owns 20 per cent and Pan Pacific Petroleum NL owns 10 per cent