US company Apache pulls out of East Coast oil hunt
"At some point in the future exploration here will be worthwhile. We can wait."Featured comment
The government's drive for new investment in oil and gas development in New Zealand has suffered another blow with the departure of Texan mid-sized player Apache Corp from a joint venture with Canadian TAG Oil.
The pair were to explore together for oil and gas on the North Island's East Coast. TAG says it will now go it alone.
The shale gas play is likely to involve the controversial practice of hydraulic fracturing, or "fracking", to which the Commissioner for the Environment Dr Jan Wright last year gave a partial clean bill of health, subject to robust regulation.
A groundswell of local opposition to the exploration has been building in the region.
Unlike the Taranaki region on the west coast of the island, the east has no previous experience of oil and gas exploration.
TAG is already actively producing oil and gas from numerous onshore wells in Taranaki, has engaged in some fracking to do so, and won more permits in the province in a government tender round late last year.
"We are a large company and we have opportunities all over the world," an Apache senior vice-president for global corporate affairs, Bob Dye, told BusinessDesk from from Houston. "We reviewed where we are at and decided to invest our money elsewhere."
Exploration activity has been progressing, including exploration areas around Gisborne and Hawke's Bay sporting signs saying "This is Apache Country".
"We wish TAG all the best," Mr Dye says. "They are a good company to work with but we decided to reallocate."
The Apache website cites no more than a commitment to "evaluate potential well performance for an oil shale project in New Zealand".
The decision, typical of oil companies with global reach and a constantly evolving portfolio of possible investments, follows a decision announced last month by the Brazilian oil and gas giant to relinquish exploration rights in the Raukumara Basin, in deep water off East Cape in the Exclusive Economic Zone.
Painted locally as a victory for opposition organised by Greenpeace and local iwi Te Whanau a Apanui, the Petrobras decision came as the company retrenched across the world to deal with serious commercial problems in its home market.
TAG chief executive Garth Johnson expressed disappointment at Apache's decision.
"Whether we like it or not, this is the nature of the oil and gas exploration business around the world and we will treat it as an opportunity and move on," he says in a statement.
"We will continue with the work programme on the East Coast in the same careful, methodical and safe way that we have carried out our work programme in Taranaki."
A much smaller company than Apache, the Canadian explorer has struggled at times to communicate its plans positively, but Mr Dye says TAG was "a good company to work with".
Most of TAG's producing assets are in New Zealand, although its shares are listed on the Toronto Stock Exchange, which was not trading at the time of the TAG statement in New Zealand.