New Zealand’s oil rush

Sleepy Thule Bay is as serene as it is picturesque. Thickets of native bush snuggle against each other right to the water’s edge in this quiet Stewart Island inlet. There’s electricity, a smattering of houses and several yachts moored off the small beach, but Thule Bay is as far from the capitals of commerce and industry as imaginable.

Here in late February, tangible signs of New Zealand’s hopes of striking it seriously rich bubbled to the surface. A scientific observer digging onshore discovered seeps of oil. About a week earlier, a 4.8 magnitude earthquake 160km to the west had rattled the island, squeezing the natural crude from the Earth. The discovery was where seeps had been found before, in the early 1980s.
But the timing could not have been better – just as international companies were contemplating bids for oil and gas exploration permits in the vast Great South Basin, a 500,000sq km area extending from the bottom of the South Island to the edge of the Southern Ocean. The basin had been explored before, in the 1970s and 1980s. A moderate-sized gas field was discovered but abandoned, the tough conditions making it uneconomic to continue.

Almost 30 years later, the hunt is on again – improved technology makes explorers confident of beating the weather. And as the seeps in Thule Bay confirm, there’s the lure of not just gas but of oil. With energy prices soaring, this frontier territory is becoming viable.

In July, the Government said six companies (two consortiums and one solo bidder) had won permits, having committed themselves to exploration programmes of about $1.3 billion. Late next month, the first ships will start gathering seismic data to find the most likely prospects. Studies already carried out by the Government have it predicting that the basin could yield more than two billion barrels of oil – 10 times bigger than the lucrative Maui discovery; a bonanza by anyone’s measure.

New Zealand Herald