ExxonMobil NZ Exploration and partner Todd Energy have dropped their exploration permit in the Great South Basin off the southern point of the South Island.
The joint venture - ExxonMobil 90%, Todd 10% - was one of three groups that won exploration rights to the deepwater basin in 2007 and has spent the last three years collecting and analysing additional seismic data.
An extended deadline on whether to ‘drill or drop’ the permit expired yesterday.
In a press release today, Todd managing director Richard Tweedie said that interpretation of collected data indicates “high technical risk,” amplified by the basin’s remote location and “harsh” operating environment.
The joint venture tried last year to reduce risk by bringing in additional partners but was unsuccessful.
“Ultimately, we have determined these factors make the opportunity unattractive for the joint venture to pursue,” Mr Tweedie said today.
An OMV-led consortium and Greymouth Petroleum, the other two permit-holders in the Great South Basin, are due to make 'drill or drop' decisions next year.
OMV NZ's managing director Wayne Kirk said last month that the company was still in "deep thought mode" on whether or not to drill.
Prospects in the deep south
ExxonMobil and Todd gained Crown Minerals approval 12 months ago to postpone by a year their deadline for making a decision on going ahead with exploration.
At the time, Energy Minister Gerry Brownlee said the postponement was "not unusual" and that "obviously there is more work that needs to be done before a commitment to drilling can be made".
Austrian energy giant OMV NZ has permits over 48,000sq km of the Great South Basin - about three times the size of the ExxonMobil permit - with Thai partner PTTEP Offshore Investment Co (36 percent each), and Japanese company Mitsui Exploration and Production Australia Pty (28 percent).
The OMV-led consortium picked up the blocks in the central part of the basin with the greatest thicknesses of sediments, some of which have recorded oil shows, but in January also deferred for 12 months their own commitment to drilling.
In 2007, then Associate Energy Minister Harry Duynhoven said that the ExxonMobil and OMV consortiums were expected to spend a combined $1.2 billion exploring the Great South Basin.
The potential spending splurge had local interests eyeing an anticipated windfall, with Invercargill mayor Tim Shadbolt planning a trip to Stavanger in Norway -- to find out how that city coped with its oil boom -- when he predicted tens of millions of dollars would be injected into the regional economy.
A total of only nine wells have been drilled in the 500,000 sq km petroleum basin -- six of them in the 1970s by Hunt International Petroleum, working with Phillips Petroleum, with a couple drilled in the early 1980s by Placid Oil.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Financial adviser John Cliffe says default KiwiSaver schemes urgently need change
- AgResearch scientist Dr Greg Bryan on the potential of the new GM ryegrass technology
- Craigs’ Mark Lister on expectations of Tuesday’s CPI data
- Tim Hunter reveals Auckland Council's "magic trick" of disappearing Watercare debt
- NBR Radio: The best interviews – updated daily