The cost of the US$27 million exploratory oil and gas Oi well offshore Taranaki has risen to US$40 million, largely as a result of the drilling partners being forced to plug and abandon the first well, which encountered technical difficulties at a depth of 1,507 metres.
The Oi-1 well is a partnership between operator AWE (31.25 percent), Pan Pacific Petroleum (50 percent) and New Zealand Oil & Gas [NZX: NZO], (18.75 percent), with costs of the re-drill to be borne by the partners in proportion to their shareholdings in the prospect, which is testing a structure similar to the nearby producing fields at Tui, Amokura, and Pateke.
"Oi-1 had drilled a 17.5 inch hole to a depth of 1,507 metres when operational difficulties were encountered setting casing. Attempts to install cement plugs and sidetrack the well were also unsuccessful," said NZOG in a statement to the NZX.
The Kan Tan IV drilling rig is now settling over a new well site, Oi-2, 150 metres from the original drill site, targeting a total depth of 3,881 metres.
"To improve conditions in Oi-2, 13 3/8 inch casing will be set at 550 metres rather than 1,500 metres planned in Oi-1," NZOG said. "This will enable a drilling fluids system to be established at a shallow depth and improve management of conditions in the well bore. Then a 12.5 hole will be drilled to 1,500 metres before 9 5/8 inch casing is set. An 8.5 inch hole will then be drilled to the target depth."
NZOG shares fell 1.8 percent to 80 cents in sharemarket trading this morning.
Oi is about 37 kilometres off the coast of Taranaki in about 120 metres of water.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- SecureCom buys Atmospheric, the Microsoft NZ Partner of the Year gone bust
- 9 Spokes accelerates efforts to get into US
- Milford sells down Wynyard as shares slump
- 'Real housewife' lawyers up, accuses Devoy of bullying, defamation
- MARKET CLOSE: NZ shares gain, led by Chorus, Orion Health, Air NZ while Tower drops again
Most listened to
- 9 Spokes CEO Mark Estall on his company's progress since listing.
- BusinessNZ CEO Kirk Hope - Upbeat on the economy, but worried about private debt
- SecureCom director Greg Mikklesen on buying Atmospheric
- Balkan borders and Kashmir killings on Foreign Affairs Scope with Nathan Smith
- Ironically, Trump showed the lack of stamina he had accused Clinton of, says NBR's Rob Hosking