Hopes of finding a large oil field in deep water off Taranaki have suffered a blow, with drillers finding no indications of hydrocarbons when the Hoki wildcat well reached its primary target area overnight.
The well, being drilled by the Kan Tan IV rig in 330m of water about 135km west of New Plymouth, was expected to cost around $50 million.
New Zealand Oil&Gas, which has a 10 percent stake in the well, said the well intersected the target North Cape Formation sands overnight, but those were not associated with any indications of hydrocarbons.
Hoki is being drilled to a depth of about 3570m and by 6am today was at 3428m. By lunchtime tomorrow it was expected the Wainui Formation would be intersected.
NZOG spokesman Chris Roberts said it remained possible something of interest could be found in the Wainui Formation, with the company able to report on that stage of the well on Monday.
"Inevitably we are disappointed when a well isn't a raging success, but we do have to temper that by the fact this always was something of a long shot," Mr Roberts said.
With wildcat wells the chance of success was 10-15 percent, so the failure to find hydrocarbons in the North Cape Formation level was the most likely outcome.
The well had been drilled in the deepest water depth of any so far in the Taranaki Basin and was the furthest west, testing the western margins of the basin, Mr Roberts said.
The permit area where Hoki was drilled was NZOG's only involvement in that western margin, so the implications of the outcome would be more a matter to be assessed by those companies which had other permits in the area.
More assessment needed to be done on the Hoki results, including looking at the quality of the sand to see if it was of reservoir quality, even if no hydrocarbons were in it this time.
When the Hoki well is finished the Kan Tan IV is to drill at least two wells in the area around the existing Tui oil fields where NZOG is a 12.5 percent partner.
NZOG's share price was down 9c to $1.52 in early afternoon trading.