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OMV eyes up to 10 wells for GSB programme

Wednesday 10th April 2019

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OMV says early success in its planned drilling campaign in the Great South Basin could require as many as 10 wells to be drilled.

The company’s primary target is the Tawhaki structure, which lies in about 1,200 metres of water 130 kilometres south-east of Balclutha.

OMV, which also operates the offshore Maui and Pohokura gas fields, expects to begin drilling towards the end of the year – potentially using the COSL Prospector. The four-year-old rig is designed for North Sea conditions and is due in New Zealand waters next month.

OMV says it GSB programme could potentially involve drilling 10 wells, up to three for exploration and up to seven for appraisal.

“The first exploration well drilled will target the Tawhaki structure. If a discovery of commercial volumes of hydrocarbons is made, up to five appraisal wells may be drilled in this structure,” the company says in its 154-page application to the Environmental Protection Authority.

“There are a number of geological structures which may also be of interest in the event that the initial exploration well drilled on the Tawhaki structure makes a substantial commercial discovery. These prospects may also be targeted as a part of future drilling campaigns.

“In the event that no indications of potentially commercial hydrocarbons are detected in the exploration wells, no appraisal wells would be drilled.”

The potential of the deep sedimentary rock in the Great South Basin, and the Canterbury Basin to the north, has long been recognised. There are proven petroleum systems in the region but drilling has been sporadic since the 1970s and activity dried up after the plunge in oil prices late 2014.

In a presentation to potential partners last year, Vienna-based OMV noted that 10 of the 14 wells drilled in the Canterbury-GSB basins had encountered hydrocarbons, with four delivering sub-commercial discoveries.

It estimated the potential resource in just the key prospects in the existing permits within the region at the equivalent of almost 3.7 billion barrels of oil and gas. The two basins cover roughly 160,000 square-kilometres – four-times and six-times larger respectively than the producing, and geologically related, Taranaki basin and the Gippsland basin off the coast of Victoria.

OMV and partner Mitsui have been exploring in the GSB for 12 years but are yet to drill a well. Their 16,715 square-kilometre permit, extended by the government last year, expires in July 2022 and requires the drilling of a well by July 2021. If drilling is successful the permit can be extended out to 2030.

The Labour-led government last year banned the issuing of new offshore exploration licences.

Greenpeace called OMV’s application “disgraceful” and said the extension granted last year made a mockery of the ban and the Ardern government’s credibility as a climate change leader.

The International Energy Agency has forecast global gas use will have to increase by more than 30 percent during the next 20 years to meet rising energy demand while also displacing emissions from higher-emitting fuels like coal and oil.

OMV’s discharge application, released by the EPA today, is the result of a technical anomaly in the legislation policing the country’s Exclusive Economic Zone.

It requires OMV to apply for a consent for the immeasurably small trace quantities of potentially harmful substances that may – if spilled – end up washing off the deck of a drilling rig through its rainwater run-off systems.

Two governments and the Ministry for the Environment have so far refused to fix the error. The EPA spent $30,000 running a two-day public hearing in New Plymouth last year for a similar application. That figure doesn’t include the applicant’s cost for staff and lawyers.

For its application, OMV took a worst-case approach and modelled the potential impact if a cupful of the most ecotoxic chemical it uses was washed overboard. It used rainfall data from Stewart Island to calculate potential rain patterns more than 100 kilometres out to sea.

Its analysis, prepared by environmental consultants SLR, shows that, should there be a chemical spill on deck, any trace amounts left after clean-up would be diluted in the rig’s settling tank. Were they then to enter the sea, those trace amounts would “not be detectable” more than 200 metres from the discharge into the “high-energy marine environment.”

Accordingly, the risk to marine and bird life in the area is negligible.

OMV will have to seek a separate marine consent for the drilling programme, which will involve actual discharges to the sea. That won't require public notification.

OMV noted the discharge consent is only a minor component of the total programme and says it will include an estimate of the economic benefit from the proposed drilling programme in its other applications.

A discovery and future development would provide “substantial economic benefits”, OMV said, without providing an estimate. As a guide, it noted that in the 16 years it has operated in New Zealand, it has invested more than $2 billion and paid more than $1 billion to the Crown in taxes and royalties.

(BusinessDesk)

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