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Shell, OMV, Mitsui to target NZ’s Great South Basin, seeking ‘next Taranaki’

Shell New Zealand and its joint venture partners OMV New Zealand and Mitsui E&P Australia are to drill an exploration well in the Great South Basin, off the South Island's southeast coast, in a move the energy industry hopes will create 'the next Taranaki.'

Shell, the operating partner, may begin drilling in 2016. The partners have an interest in two licences that run through 2017. Shell took over from OMV as operator in 2011 when it bought in to the permits. OMV has previously said it needed deep-sea drilling expertise because the target waters are up to 1,200 metres deep.

"Unlocking the petroleum potential in the Great South Basin could provide real benefits to not only local communities, but to our country as a whole," said David Robinson, chief executive of the Petroleum Exploration and Production Association. "We just need to look towards the impact the oil and gas industry has had on Taranaki to know that the economic benefits of growing the industry are significant."

Other oil giants have had a sniff at the Great South Basin and backed away. In 2010, Exxon Mobil surrendered its exploration licence and Todd Energy withdrew at the same time. But interest has returned to the technically challenging waters in New Zealand's southeast.

Last month Woodside Petroleum was granted an offshore licence with local explorer and producer New Zealand Oil & Gas in the Great South Basin, while NZOG picked up another territory in the basin off the South Canterbury coast.

Deep sea drilling has met opposition from Maori and environmental groups concerned at the risks posed in the event of a spill.

But PEPA chief Robinson said oil and gas exploration and production in Taranaki showed the industry can be compatible with the environment.

"Taranaki is a picturesque region, and a standing example of a region that has both a thriving oil and gas industry and a pristine environment," he said.

"Strong regional economies mean more jobs, better wages, career opportunities and local investment. It is important that we create the success we see in Taranaki across other regions in New Zealand, and we hope the decision to drill an exploration well in the Great South Basin will be the start of sharing the oil and gas industry's success with other regions around the country," he said.


Comments and questions

Hopefully a large gas find could displace all that coal that is used on the South Island.

...a country overall much left of centre than New Zealand - and the wealthiest country on a GDP per capita basis - largely on account of its oil and gas programmes.

Our well intending labour and green parties - whose social programmes I fully support - would do well to remember how much revenue oil and gas brings in (royalties on top of corporate taxes) and how these revenues can achieve the twin goals of social spending on the welfare state and a balanced budget - a rarity in the developed world.

The oil and gas train sailed about 100 years ago - NZ shouldn't still be refusing to get on. Further - natural gas is far cleaner than NZ's heavy use of coal. Emissions in the United States have dropped dramatically (even below their Kyoto protocol levels had they stayed in!) on the back of natural gas from shale fracking displacing coal - not some hard core left wing clamp down on the industry. In fact - there is no doubt emissions and global warming would be worse in the absence of fracking in the united states - far worse.

Interesting operating conditions:

Royal Dutch Shell is pressing ahead with the world's deepest offshore oil and gas production facility by drilling almost two miles underwater in the politically sensitive Gulf of Mexico.

Falklands: [Premier] has since been studying how to produce oil in the difficult conditions of the South Atlantic, without an oil pipeline infrastructure.

Another issue is whether any hydrocarbons found turn out to be oil or gas. According to Sharp, it would be pretty straightforward to transport oil.

"The idea I think would be a pretty standard one and that would be a floating, production, storage and offtake vessel: an FPSO," he said. "I doubt there would be any fixed platform. It would be very similar, for example, to Tullow in the deep water of Ghana. So, it's a number of wells, and what's called subsea completion, and tied back to an FPSO, which as the name suggests, would process and store and periodically would be another tanker and just pick up the oil and take it to wherever the market is," Sharp said.

Gas is more difficult.

"First of all you've got to find a significant amount of it because there is no nearby market that you can pipe the gas too," said FOGL's Bushell. "Even if Argentina was open, the cost of running a pipeline to the actual industrial parts of Argentina would make it a non starter.

Bushell continued: "If we found a significant quantity of gas, we would actually pipe the gas to the islands and build an LNG plant there. But the minimum amount of gas that we would have to find is at least about five or six trillion cubic feet.

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