Shell, OMV, Mitsui to target NZ's Great South Basin, seeking 'next Taranaki'

Tuesday 7th January 2014

Shell New Zealand and its joint venture partners OMV New Zealand and Mitsui E&P Australia are to drill an exploration well in the Great South Basin, off the South Island's southeast coast, in a move the energy industry hopes will create 'the next Taranaki.'

Shell, the operating partner, may begin drilling in 2016. The partners have an interest in two licences that run through 2017. Shell took over from OMV as operator in 2011 when it bought in to the permits. OMV has previously said it needed deep-sea drilling expertise because the target waters are up to 1,200 metres deep.

"Unlocking the petroleum potential in the Great South Basin could provide real benefits to not only local communities, but to our country as a whole," said David Robinson, chief executive of the Petroleum Exploration and Production Association. "We just need to look towards the impact the oil and gas industry has had on Taranaki to know that the economic benefits of growing the industry are significant."

Other oil giants have had a sniff at the Great South Basin and backed away. In 2010, Exxon Mobil surrendered its exploration licence and Todd Energy withdrew at the same time. But interest has returned to the technically challenging waters in New Zealand's southeast.

Last month Woodside Petroleum was granted an offshore licence with local explorer and producer New Zealand Oil & Gas in the Great South Basin, while NZOG picked up another territory in the basin off the South Canterbury coast.

Deep sea drilling has met opposition from Maori and environmental groups concerned at the risks posed in the event of a spill.

But PEPA chief Robinson said oil and gas exploration and production in Taranaki showed the industry can be compatible with the environment.

"Taranaki is a picturesque region, and a standing example of a region that has both a thriving oil and gas industry and a pristine environment," he said.

"Strong regional economies mean more jobs, better wages, career opportunities and local investment. It is important that we create the success we see in Taranaki across other regions in New Zealand, and we hope the decision to drill an exploration well in the Great South Basin will be the start of sharing the oil and gas industry's success with other regions around the country," he said.

BusinessDesk.co.nz

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