NZ: Black gold or a fool’s errand?

If you’re of the barrel-half-full persuasion, there is good news for New Zealand in this: the more international supply tightens, and the price rises, the more likely it is that major exploration companies will be tempted to look here. Finds previously considered uneconomic will become worth exploiting.

But despite worsening international forecasts, and our Government laying out the welcome mat, exploration has yet to begin on the scale needed.
Our remoteness, wild oceans, distance from markets, lack of infrastructure and soaring exploration costs all play a part. We’re seen as the final frontier – or last throw of the dice.

That’s not the picture painted by government scientists and politicians. A renewed burst of research and seismic data-gathering in our petroleum basins has prompted big oil talk. The Government stepped-up efforts to entice explorers here in 2004, firstly by reducing royalties and offering tax concessions. Then it awarded Crown Minerals $15 million to gather geological data in our offshore sedimentary basins and another $6 million last year – and offered the seismic data free to explorers. The seismic surveys only heightened scientific enthusiasm.

As the Government offered exploration permits off the North Island’s west and east coasts last year, Adam Feeley, then head of Crown Minerals, said the seismic surveys had reaffirmed the enormous potential untapped under New Zealand’s vast continental shelf. He drew a comparison with Norway, which transformed its economy with oil discoveries in the 1960s.

In the last two years, more than half a million square kilometres has been offered for exploration – but the uptake has been underwhelming. An offer for blocks in the Deepwater Taranaki Basin attracted no takers. Only two permits were issued in the Northland basin; interest in the East Coast basin was similarly lukewarm.

Sporadic bursts of exploration since the 1960s have yet to find a big oil field. In the only commercially successful area, Taranaki, over 350 onshore and offshore wells have been drilled since 1955; the Maui oil and gas find in 1969 remains the biggest. When Maui production peaked in 1997, we were meeting a quarter of our oil needs. In the past decade, production has slumped and we now import more than 90 per cent.

New Zealand Herald