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OMV seeks more time to decide on Great South Basin

Tuesday 5th July 2011 1 Comment

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The Government's latest hope for a "big oil" player to further prospect in the Great South Basin beyond Stewart Island has asked for more time before deciding on exploratory drilling or expensive 3D seismic surveys.

Originally, Austrian energy giant OMV NZ had until July 10 to decide whether to develop its interest in three licence areas further under "drill or drop" conditions, though on March 25 it won permission to substitute exploration drilling for three-dimensional seismic exploration as an intermediate and lower-cost step.

Now it wants to put off until September 10 its deadline for making a commitment to the work, without changing the deadline for completion, July 10 next year.

OMV has exploration permits for three blocks totalling 48,000sq km, with Thai partner PTTEP Offshore Investment (36 percent each), and Japanese company Mitsui Exploration and Production Australia (28 percent).

They acquired the blocks in the central part of the basin with the greatest thicknesses of sediments, some of which have recorded oil shows, but exploratory drilling in waters 500m to 1250m deep is expected to cost as much as $US100 million ($NZ120m).

OMV has previously said that it is committed to exploration of the Great South Basin and required additional time to refine the scope of work for the next phase.

According to OMV’s New Zealand managing director, Wayne Kirk, very little was known about Great South Basin geology when OMV and its joint venture partners were awarded the permits in July 2007.

But nine wells have already been drilled in the 500,000 sq km petroleum basin -- six of them in the 1970s by Hunt International Petroleum, working with Phillips Petroleum, with a couple drilled in the early 1980s by Placid Oil.

In October, rival oil companies ExxonMobil New Zealand and Todd Energy bailed out of drilling for oil and gas in the Great South Basin, and surrendered their interest in permit PEP 50117, blaming "high technical risk", the remote location and tough conditions facing deep sea drillers.

ExxonMobil's permit block was 100km from shore and in a water depth of 500m to over 1000m.

That joint venture -- put together in July 2007 -- had tried to mitigate the risk by seeking other potential partners but could not attract any players.

In 2007, the two big consortiums led by OMV and by ExxonMobil said they were willing to spend $NZ1.2 billion exploring in the basin.

Separately, US independent driller Anadarko Petroleum Corp has a half share -- with Australian-based Origin Energy -- in the PEP 38262 offshore exploration permit in the Canterbury Basin and has said it will pay the first $US30 million of the joint venture's costs to drill in water depths of 1000m, with further costs split 50:50.

That joint venture was reported at one point to be shopping for a suitable rig to drill an exploration well possibly by sharing costs with other operators wanting to drill off the NZ coast.


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Comments from our readers

On 6 July 2011 at 1:00 pm Kevin M said:
Its great to see confidence and investment in NZ Inc. ..... Good Stuff
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