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Brownlee unfazed by ExxonMobil withdrawal

Energy and Resources Minister Gerry Brownlee has downplayed ExxonMobil's decision to abandon its PEP 50117 permit in the Great South Basin, as announced by 10% partner Todd Energy yesterday.“It was great that Exxon decided to stay for an extra year,

Nina Fowler
Tue, 12 Oct 2010

Energy and Resources Minister Gerry Brownlee has downplayed ExxonMobil’s decision to abandon its PEP 50117 permit in the Great South Basin, as announced by 10% partner Todd Energy yesterday.

“It was great that Exxon decided to stay for an extra year, accept that extension and do some more work but in the end they have made it clear that they’ve got to consider things from their global portfolio perspective,” Mr Brownlee told NBR.

The withdrawal may in fact signal a “very significant opportunity” to other players in NZ who may be interested in ExxonMobil’s permit acreage, he said.

The seismic data acquired by ExxonMobil will now become the property of the Crown and be made available to companies that express interest in the abandoned permit acreage, likely to be offered up as another blocks offer next year.

Both OMV, which has exploration rights in the Great South Basin over an area roughly three times the size of PEP 50117, and Anadarko and Origin, operating further north in the Canterbury Basin, are “very very positive about what they see as their opportunities,” Mr Brownlee said.

Anadarko has signalled it will look to drill in the 2011/2012 summer season if data interpretation and conditions are favourable.

John Pfahlert, executive officer of the industry body Petroleum Exploration Association of NZ, told Radio NZ yesterday the ExxonMobil joint venture was “always looking for something several times the size of the Maui field” to justify its production costs.

“Either deposits are smaller than that or there’s nothing there at all,”,he said, adding that ExxonMobil’s decision to withdraw did not necessarily cast doubt on permit areas in other parts of the Great South Basin.

“Every block that a company is exploring is going to be different. All this really says is that, in that particular block at this particular time, ExxonMobil and their joint venture partner have decided that the investment of another $US100m to drill a well isn’t warranted at this stage.”

“If the price of gas or oil were to double or triple, then maybe that decision would be different.”

ExxonMobil’s withdrawal does mean that OMV, Anadarko and Origin have one fewer potential partner to share the cost of bringing in a deepwater drill rig should they decide to drill.

Drilling an exploration well is estimated to cost about $US100m, on top of previous seismic exploration costs.

Companies Office documents show that ExxonMobil NZ Exploration posted losses of $4m last year, $39m in the year to December 2008 and close to $22m in the year to December 2007, reflecting their seismic and technical exploration costs.

Invercargill mayor Tim Shadbolt told Radio NZ last night that the region has prepared for the possibility of a multi-million dollar oil boom but is aware that the region’s geography and climate poses a significant challenge to explorers.

Nina Fowler
Tue, 12 Oct 2010
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Brownlee unfazed by ExxonMobil withdrawal
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