Here is an article published yesterday that points out again the...

Here is an article published yesterday that points out again the potential for action in NZ.

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Money for oil, gas exploration


By JAMES WEIR The Dominion Post | Tuesday, 17 Nov 2009

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Oil and gas companies operating in New Zealand have a combined war chest of around $800 million and they are actively exploring, says McDouall Stuart research head John Kidd.

He told an oil and gas conference in Wellington yesterday that operators such as AWE, New Zealand Oil and Gas, Pan Pacific, Cue and Horizon were "cashed up" and wanted to expand their reserves base or buy investments.

Unlisted and multinational players such as Todd Energy, Greymouth Petroleum, Austrian company OMV and Mitsui were also likely to be flush with cash.

"Most are reinvesting heavily and appear increasingly committed to their New Zealand plays," he said.

This summer was shaping as a "very busy year" for drilling offshore Taranaki, he said.

New Zealand Oil and Gas (NZOG) is a partner in the Albacore and Hoki wells. Albacore is due to start drilling in the next few days and it should take about three weeks to drill.

NZOG and its partners in Tui, AWE and Pan Pacific, will drill two more wells in the Tui licence area early next year.

"Just from NZOG's portfolio we think there is a greater than 80 per cent chance of one of those wells coming in," Mr Kidd said.

While the picture was cloudier for onshore Taranaki there were reasons for optimism, with three wells planned this year and another three next year at Todd Energy's Mangahewa. Todd Energy had suggested Mangahewa could be New Zealand's second-biggest gas field.

"If they are right, [Mangahewa] could be hundreds of petajoules," Mr Kidd said.

The targets for new gas were expected to be Methanex's Motunui methanol plant nearby in Taranaki, and potentially the Huntly power station in the Waikato.

Mr Kidd said at the start of this year conventional gas reserves in New Zealand totalled close to 2000 petajoules (PJ), including Kupe which is just about to come into production.

New Zealand had reserves equal to about 11 years of gas use, which was around the Organisation for Economic Co-operation and Development average.

Electricity generation remained the backbone of gas demand, accounting for about 100 PJ a year, he said.

Methanex spent about $60m last year getting Motunui running and it was expected to be an investment for at least five years.

Mr Kidd said the giant Huntly power station, with almost 1000 megawatts of generation, was also a big opportunity for new gas supplies.

It was gas-fired in the 1980s and 1990s, using about 100 PJ of Maui gas a year, but had been running on cheap coal.

The cheap coal contracts expire in two years and Huntly would face paying for carbon emissions. But Huntly would still be needed for power generation.

"It is a huge gas opportunity, and a reason for optimism for the gas industry," Mr Kidd said.