In a report commissioned by the Crown Minerals division of the Ministry of Economic Development, GNS said this view was based partly on 5,000 km of high quality two-dimensional seismic reflection data acquired in 2009 by Crown Minerals in partnership with petroleum services company CGGVeritas.

Other components in the investigation were satellite data of sea surface slicks and knowledge of the geology in the adjacent Northland and Taranaki Basins.

The analysis shows that Reinga Basin contains potentially oil-bearing sedimentary rocks that are up to 7 km thick and it has all the elements needed for a working petroleum system. Its rock sequences are similar to those in the Taranaki Basin.

Lead author of the report, Vaughan Stagpoole, said a reconnaissance seismic survey in the 1990's indicated the area was potentially prospective for oil and gas. This prompted a follow-up seismic survey in 2009 done to oil industry standards.

“When we examined the 2009 seismic data, there was clear evidence of petroleum expulsion zones, which means there is an active petroleum system in the basin,” Dr Stagpoole said.

The geology in the 150,000 square km Reinga Basin is less complex than the adjacent Northland Basin, making it more attractive to explore.

However, it is further from land and in slightly deeper water – typically between 1,700 m and 2,000 m - which can be a challenge for explorers.

Early in 2010 the government opened bidding for blocks in the Reinga Basin. The blocks offer will close in August, at the same time as a blocks offer closes for the adjacent Northland Basin. Permit-holders are likely to be announced in late 2010.

The Reinga Basin prospectivity report, the latest in series of such reports on New Zealand frontier basins prepared by GNS Science, is being used by Crown Minerals to help promote Reinga Basin to exploration companies internationally.

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The company which operates the Marsden Point refinery near Whangarei also owns the pipeline supplying refined fuel to its Wiri terminal supplying Auckland. A further line carries jet fuel from the refinery to Auckland airport.

Chairman of NZ Refining David Jackson said when announcing the financial results for the 2009 year, that the new Jetty Three facility provides a new solution for the Auckland market as the Wynyard wharf development progresses.

This opened up opportunities for NZRC to provide marine fuel to other ship operators, he said.

Construction of the marine fuel oil barge loading facility at Jettty Three began in late 2008.

The company also completed the major $191 million Point Forward expansion project in October.

This complex expansion project has grown the Company by around 15%. Mr Jackson noted that the commissioning process was completed on time and at a cost above budget of around 7%, which was a fantastic result, given the pressure on costs.

Additional capital spend of approximately $24 million is budgeted for the 2010 year.

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Three exploration holes will be drilled in PEP 38614 in the Tahora – Tangarakau area during February and March. A single drill rig, similar to those used for water well drilling, will carry out the work with the permission of individual landowners and consents from the Stratford District Council.

The drilling will further define Solid Energy’s coal resources and the potential for coal seam gas. Four similar exploration holes were previously drilled by Solid Energy in the Taranaki near Mt Damper and Waitaanga last winter.

Coal seam gas occurs naturally in coal seams and is estimated to have the potential to add 5% to 10% to New Zealand’s gas supply.

Solid Energy has been investigating coal seam gas as a source of energy since 2005. It has successfully generated electricity using a gas generator from a six well appraisal site in the Waikato.

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Maari partner Horizon Oil said in its December quarter report that the workover unit was erected on a structure built over the platform’s well bay.

The field was shut in for 20 days in January for a planned inspection and maintenance of the FPSO Raroa.

During this shut-in period, the opportunity was taken to carry out the heavy lifts over the wellbay to install the workover unit.

One repair able to be done with the workover rig in place will be fixing of the downhole pump in the MR5 production well into the main Moki sands reservoir.

Hook-up of the MR9 well into the M2A sands reservoir, some 50 m above the main reservoir, has been completed and the well is ready to come on line, Horizon said.

Meanwhile Horizon said that in the large PEP 51313 to the immediate south and west of Maari, a 200 sq km 3D seismic survey will be undertaken in the second quarter of 2010 by the Reflect Bergen Resolution vessel.   

Horizon holds a 30% stake in the permit, which is operated by Todd Energy (50%). Cue Energy Resources hold the remaining 20%.

The survey will be over the Matariki prospect area to the south of Maari. With the existing 3D seismic data over Maari, which also gives coverage of the Pike and Paua prospects in PEP 51313, a continuous 3D coverage will be available over the key prospects in the southern area of the permit.

At the completion of the 3D seismic survey two further swath lines totalling 80 km in length may be acquired to provide advance coverage on critical elements of the Te Whatu and Pukeko prospects to the west of Maari ahead of another seismic survey over the Te Whatu area.

Horizon said recent technical work has reinforced the company’s previously held views on the high level of prospectivity of the permit.

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The Petroleum Exploration Permit 51988 covers 1,138 sq km immediately south of Todd Energy’s Karewa gas discovery and 50 km west of Kawhia Harbour. Todd has applied for a mining permit over Karewa.

NZOG will operate the Mangaa permit and holds a 100% stake.

The permit is located in an area adjacent and to the north of PEP 38491 containing the recently drilled Albacore prospect which encountered non-commercial traces of hydrocarbons.

Work programme for the permit calls for a possible acquisition of over 200 sq km of 3D seismic data and a well to be drilled within the first three years.

There is a large amount of existing seismic and well data on the licence gathered over 40 years by a range of operators, including Fletcher Challenge and Todd Energy.

NZOG chief executive David Salisbury said the permit is "a further step in the ongoing building of NZOG's exploration portfolio, targeting quality acreage that will generate a portfolio of prospects, from which to choose the best for drilling."

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TAG said it had been awarded a 250 sq km permit extension at the south of its large onshore East Coast Basin permit (PEP 38349) now covering 6,860 sq km from north of Napier to northern Wairarapa.

TAG said the extension includes the 8 km long Kawakawa anticline, a reverse fault structure at depth that has potentially "double stacked" both the Waipawa black shale and Whangai shale formations, effectively to a potential 600 m thick fractured oil shale formation.

Garth Johnson, TAG's chief executive officer said, "Kawakawa is an attractive new play area for TAG. Strong oil indications have been recorded in the immediate area from both outcrop and seeps and geochemical analysis.”

These indicated conclusively that this oil was generated either solely from Waipawa black shale or from a combination of Whangai shale and the Waipawa black shale formations.

"Kawakawa can be drilled at reasonable drilling costs due to the relatively shallow depths," Mr. Johnson said. The permit extension area lies south of Cape Turnagain.

TAG plans to complete additional geological and geochemical mapping over the area before adding Kawakawa-1 to the company's multi-well East Coast drilling campaign that includes Boar Hill-1 (also in PEP 38349) and Waitangi Hill-1 (PEP 38348) north of Gisborne, all targeting shale formations.

Mr Johnson said the Waipawa black shale has characteristics very similar to the hydrocarbon-yielding Bakken Formation in the Williston Basin (North America) and the Whangai Shale has many analogies to the Barnett shale in Texas.

The two East Coast shale formations are rich in organic content and naturally fractured. Core sampling has also shown porosities of 22% to 30%, well above what is typically found in the Bakken or Barnett shales.

TAG intends to use proven North American experience and technologies in New Zealand to exploit the shale resources, Mr. Johnson said.

TAG now holds 100% of the Cheal oil field in Taranaki.

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Operator Origin Energy says in its December quarter report that commissioning tests have produced streams of gas, condensate and LPG from the onshore production plant near Hawera.

On 4 December 2009, the first raw gas stream was brought ashore, effectively signalling the start of an expected 15 years of Kupe production. The first sale of LPG occurred on 31 December and the first shipment of light crude from Kupe left Port Taranaki in late January 2010.

During commissioning in the quarter 0.4 PJ of natural gas were produced along with 46,000 barrels of condensate (light oil). About 500 tonnes of LPG were also produced in the period.

When in full production the project is projected to annually produce 20 PJ of sales gas which has been contracted to Genesis, together with initial yields of 90,000 tonnes of LPG and 1.7 million barrels of light crude. The relative volume of liquids is expected to decline over time due to the characteristics of the reservoir.

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Kupe Field - Production Statistics - 08/09 Annual Report

The Kahili field was discovered in 2002, with a mining permit granted in 2004, but production stopped shortly after when the well unexpectedly filled with water. However, significant volumes of gas could remain in the area.

The 5.99 square kilometre block offer includes the Kahili-1B well, which has been closed but not filled in.

“The area includes the gas facility and pipeline at Kahili wellhead, which makes the gas volumes required for commercial viability of the field very low.

The Government believes the potential of the field can be realised and the tender is being opened today to see what commercial interest there is,” said Mr Brownlee.

"Gas discoveries are important to New Zealand’s energy security and provide local employment and support regional growth and local businesses.”

The block offer will run for almost three months and will close on 3 May 2010.

Data on the block offer is available here.

Related Links: Reinga Block Offer

Pike River says in its December quarter report that the shipment coincides with a buoyant and encouraging international market in which world coking coal prices are expected to rise even higher than previously forecast.

The company says international market observers anticipate that premium hard coking coal prices could rise by 40% from April 2010 to US$180 (about NZ$260) per tonne.

China is again driving demand and is expected to import more than 20 million tonnes of hard coking coal (premium and standard grades) in the 2010 calendar year.

India is also projected to import more than 20 million tonnes of hard coking coal in the 2010 calendar year, including more than six million tonnes of premium hard coking coal to feed its steel manufacturing industry.

The inaugural Pike River shipment with a value of approximately NZ$3.4 million, will go to one of the company’s Indian customers.

Pike River’s second export shipment, scheduled for the April – June 2010 quarter, is expected to be around 40,000 tonnes.

Progress on roadway construction through a graben zone of faulted rock immediately ahead of pit-bottom have advanced through 106 m of rock with a further 40 m remaining to coal. This is expected to be reached in February 2010.

This will allow direct access to the main areas where hydro-mining production will commence.

First hydro-mining will be dependent upon advance rates achieved through the graben, construction of raw coal sumps in that stone area and access roadways through coal.

Commissioning of the hydro-mining system is now scheduled for June/July 2010. The impact is to defer approximately 120,000-150,000 tonnes of coal production to the July-September 2010 quarter.

The final recruitment of around 10 more staff to support hydro-mining operations will bring total employed to some 160.

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OceanaGold says the record 300,044 oz for the financial year to December 31, 2009 was up 14% on the previous year.

The company said recent near-mine exploration at Macraes has meant that it now plans to reopen its Round Hill, Southern and Golden Point pits plus expansion of the Globe Progress mine at Reefton.

These additional resources and reserves had brought New Zealand gold reserves up by an additional 754,000 oz to 1.94 million oz. Total New Zealand resources are now 3.78 million oz of measured and indicated, and 3.01 million ounces of inferred.

The gold price assumption used to calculate reserves was US$800 an oz. Current gold price is around US$1060 an oz.

By the end of the quarter, six drill rigs were operating at the Macraes goldfield and one at the Reefton mine with most of the US$1.9 million spending on exploration for the quarter directed at a continuing brownfields exploration programme in New Zealand.

Paul Bibby, chief executive officer of Melbourne-headquartered OceanaGold, said “The additional reserves that have been added at the Macraes open pit mine are a further reflection of the potential that exists within the Macraes goldfield to convert resources to reserves. “

“There is a significant resource base at Macraes and over the past few months we have successfully added three years to the mine life through this conversion programme, extending the operation out to at least 2016.”

He said the company expects further positive results from the exploration programmes to continue over the coming months.

OceanaGold said, in its production guidance statement for 2010 was for an output of 270,000 - 290,000 oz of gold at cash costs of US$455- US$495/oz.

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He said that the technology was one of the contributors to a recent large increase in US gas production from unconventional sources such as tight gas sands, shale gas and coal seam gas.

In the Barnett shales in Texas there had been a dramatic rise in gas production in 10 years from 30 Bcf/d to 1,400 bcf/d, he said.

There had been a step-change in well completion technology with horizontal drilling and fracturing.

Microseismic monitoring is helping oil and gas engineers and geologists to “see” through the rock below to watch the subsurface rock formations fracturing as the “fraccing” liquid is forced into them.

The sensitive technology, which uses subsurface sensors with powerful data collection and analysis software, can record naturally occurring microearthquakes or tiny rock movements. When the fraccing fluid is pumped into the target reservoir a myriad of microearthquakes occur as the rock is fractured and the proppant fluid is forced in under high pressure.

The individual locations of these microseismic events are mapped to create an image of the fracture and can even be watched in real time by the operators above or by internet to offices elsewhere.

A network of less than 10 monitoring instruments can pick up thousands of seismic events in a few days and create a picture of the flow pathways within the reservoir.

Mr Vandenborn said he had just been involved with microseismic work in coal seam gas reservoirs in Queensland.

He said the question with fraccing was to know how far it had grown into the rock from the well. Generally the further the fracturing went, the greater the production.

The microseismic monitoring, by examining exactly how far the fracturing has gone and whether increased pressure or frac time are necessary, and allows better control over future well spacing and therefore reduction of well costs by not drilling unnecessary wells.

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Eastern said in its December quarter report that the growth of the dairy industry in the South Island is presenting the company with further sales opportunities.

Eastern mines sub-bituminous coal from its Takitimu mine near Nightcaps in western Southland. The mine’s largest contract is with Fonterra’s Clandeboye plant near Timaru where the coal is railed. The current 130,000 tonne a year contract began in September 2008.

The Takitimu mine is undergoing further plant upgrades to ensure the mine can meet increased production targets, particularly now that Takitimu stands as the only major supplier of sub-bituminous coal in the Southland region.

After the completion of a successful drilling programme at the Eastern’s Ohai permit an agreement has been reached with the adjoining landowner with a view to extending the area under development at Takitimu.

A further drilling programme will start in February to obtain data for future mine planning and future resource consents process on the assumption that part of this area will come under the current Takitimu mining permit, Eastern said.

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Sources: AWE, Origin Energy and Lindsay Clark
The Sydney-based company, formerly called Australian Worldwide Exploration Ltd, recently adopted its previous AWE abbreviation as the official name of the company, AWE Ltd.AWE said in its December quarter report that the rig would be towed across the Tasman Sea and will begin drilling the Hoki-1 exploration well as the first well in its New Zealand programme.

Hoki-1 will target a large prospect on the outer edge of the Taranaki Basin, which has the potential to hold 250 million barrels of recoverable oil.The rig will then drill at least two wells in the area around the Tui oil field (AWE 42.5%).Further drilling is also under consideration in the Taranaki Basin beyond the currently defined programme, the latest AWE report said. In its latest investor presentation AWE said it was awaiting environmental appeal over its other proposed well in its current programme.

This is the Tuatara-1, a Moki sands play, off D’Urville Island in the Marlborough Sounds. The Tuatara prospect has a 100 million barrel potential. Origin Energy, which plans to drill two exploration wells in the Northland Basin with the Kan Tan IV rig, said in its December quarter report that the wells are now scheduled to be drilled in the June quarter of 2010.

A year ago Origin said that its two gas prospects south west of Auckland, the Korimako and Tarapunga, were to be drilled in late 2009.Korimako prospect south west of the Manukau Harbour entrance is a Miocene fault-dependent closure with potential to contain 500 bcf of natural gas.Tarapunga is a Pliocene-aged turbidite play with a potential of 300 bcf of gas.

The well site is north of Todd Energy’s Karewa gas discovery some 50 km offshore from Raglan. 

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Major earthworks for the first stage of construction began for the LPG plant which is expected to provide 200,000 hours of work in Taranaki.

Todd plans to produce LPG from increased gas it plans to have available from the current re-drilling of its existing onshore Mangahewa gas condensate field plus extraction of LPG from its 26% share of the gas condensate stream from the nearby offshore Pohokura field.

Todd Energy is currently drilling the third well in its current Mangahewa development drilling programme, the Waitui-1. It late last year drilled the Mangahewa-4 and Mangahewa-6 wells.

Richard Tweedie, managing director of Todd Energy said “construction work will keep Taranaki businesses busy for the next 18 months, creating in excess of 200,000 man hours of work.”

Major earthworks for the LPG plant, associated storage and load out facilities are expected to be completed in May this year.

Mr Tweedie said the main plant construction takes place next summer with a site workforce of approx 45 people at anyone time. At peak periods up to 100 workers may be required on site. The plant is expected to be completed in mid 2011.

Enerflex System Ltd based in Edmonton, Canada will supply the recovery plant packaged process equipment.

New Plymouth based company, Transfield Worley will carry out the engineering, procurement and construction (EPC) of the LPG plant including installation of the LPG packaged equipment and provision of LPG storage bullets and a truck load out facility.

Mr Tweedie said fabrication work and mechanical and electrical installation work is yet to be competitively tendered to local contractors.

Todd Energy is also in the process of placing a contract with local engineering company Plant & Platform for pipeline modifications required as part of this project, which also involve other local contractors.

Expected delivery of all LPG plant equipment is expected by December 2010 and installation & hook-up construction work should be completed by July 2011.

Todd Energy plans to deliver LPG to customers in the North and South islands via wholly-owned retail company, Nova Energy.

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