Exxon Mobil abandons Great South Basin; Tui well back

Monday 11th October 2010

Oil supermajor Exxon Mobil has done as predicted a year ago and surrendered its exploration licence in the Great South Basin in a move that dents the government’s efforts to “transform” the resource sector by pursuing frontier oil and gas basins more aggressively.

Analysis of extensive seismic survey data found “the acreage has a high technical risk”, said Todd’s managing director, Richard Tweedie.

“This is further amplified by the remote location and the harsh operating environment.”

While Brazilian giant Petrobras and the US specialist deep-sea driller Anadarko are both preparing to drill in frontier territories, the Exxon Mobil pull-out demonstrates how difficult it remains for New Zealand to attract substantial exploration activity in offshore licences that are under-explored, involve very deep water, and are notable for their foul weather.

Exxon Mobil signalled in November last year that it had little further interest in the Great South Basin, after analysing the results of a round of targeted seismic surveys.

It announced it would seek farm-in partners while extending its “drill or drop” rights in PEP 50117 by a year.

The local industry took that as a signal that Exxon Mobil was looking to quit the property, which it held in partnership with locally owned Todd Energy, which holds 10% of the permit.

“I’d say Exxon Mobil didn’t like what they found,” one industry executive was quoted as saying at the time of the announcement.

Todd has also surrendered its rights along with Exxon Mobil.

The licence area is 100km offshore with ocean depths of 500m to 1km. Approximately 1,336 square kms of 3D seismic data was collected between December 2007 and April 2008, with an additional 961 sq kms of 2D seismic also acquired and processed. The withdrawal leaves only locally owned Greymouth Petroleum with an interest in Great South Basin exploration territory.

Meanwhile, Tui oil field operator AWE, announced this morning the resumption of oil production from the Pateke-3H well, which has been shut in since late June, owing to problems with an artificial lift system.

“A workover of the well has been successfully completed and the Kan Tan IV offshore rig, which has been onsite for the duration of the work, will be released shortly,” AWE said in a statement to the NZX.

Final costs for the Pateke-3H workover have not yet been completed, but the current estimate for this extensive work is approximately US$46 million. The work program was heavily impacted by severe weather conditions in the area over the past six weeks with approximately 30% of work time lost due to weather.

Participants in PMP 38158 are AWE (42.5%), Mitsui E&P Australia Pty (35%), New Zealand Oil & Gas (12.5%), and Pan Pacific Petroleum, 10%.

Businesswire.co.nz

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