Total gas reserves for the year to 1 January 2010 rose to 2076 petajoules compared to 1970 PJ in the previous year to 1 January 2009.

The Kupe offshore gas field, which came into first production late in 2009, reported the largest increase in reserves – up to 265 PJ in the latest statistics from 188 PJ in the year to 1 January 2009.

Two substantial onshore gas fields Kowhai and Turangi, both operated by Greymouth Petroleum have also been separately listed for the first time. Kowhai contains 7%, and Turangi 8% of the nation’s gas reserves.

Exploration and development activity remained at high levels in 2009 with 37 wells drilled – the largest number since 2007 when a record 43 wells were drilled.

Offshore well drilling decreased from 18 wells in 2008 to 8 in 2009. Onshore drilling almost doubled increasing from 16 wells in 2008 to 29 in 2009, with coal seam gas wells accounting for 19 of these in the latest year.

Expenditure on development in mining permits rose to $1.2 billion in 2009 from $963 million in 2008. However spending in exploration permits fell to $191 million in 2009 from $314 million the previous year.

For the full detailed report see the New Zealand Energy Data File 2010 on the MED website.
 

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NZOG said it plans to reduce its current permit interest by attracting one or more partners prepared to commit to drilling at least one exploration well.

This follows the mapping of an extensive portfolio of prospects and leads within the 100% NZOG-owned PEP 51311 permit. Over the past year 500 km of new 2D seismic data has been evaluated plus other historic seismic has been reprocessed.

The highest ranked prospect is Kaupokonui, a stacked series of Motueka coastal sands, with estimated mean prospective recoverable resources of 200 plus million barrels of oil.

Previously NZOG said PEP 51311 is within the same petroleum system that has charged the Moki sands which hold the reservoir for the Maari oil field 20 km to the west, and the Farewell sands of the Kupe field 20 km to the east.

The stacked Motueka coastal sands in the Kaupokonui prospect are laterally truncated and predicted to be sealed by deep canyons. The prospect relies on a trapping mechanism found in other parts of the world but not yet shown to work in Taranaki.

NZOG said in its June quarter report that a preliminary well plan and budget for an exploration well have been obtained, and a site survey undertaken over the proposed Kaupokonui drilling location. A well commitment is required by January 2011, with the well to be drilled within the following 12 months.

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The review of the Crown Minerals Act is a key component of the government’s Petroleum Action Plan, which aims to maximise the gains from New Zealand’s petroleum resources for the benefit of all New Zealanders.

“The proposed amendments to the Act are not extensive and do not represent any significant changes in the way the Crown manages and allocates rights to the country’s petroleum, gold and silver resources, or minerals on or under land owned by the Crown,” Mr Brownlee said.

“For example, the government is not proposing to nationalise any new minerals.

“Independent analysis of the regime shows that it is basically sound. However, the petroleum and minerals industries have changed a lot in the 20 years since the Act was written.

“Improvements can be made to ensure the regime does what it was designed to do, and so that it is better able to deal with future developments and new technologies.

“The review will also bring added clarity and efficiencies to the permitting system, which will remove unnecessary costs to the government and permit holders.”

Applying for a prospecting, exploration or mining permit is only one of a series of steps required to access Crown-owned minerals.

“There is no intention to change the current situation where minerals permits, Resource Management Act consents, health and safety approvals, and land access consents are required separately before exploration or mining activity can commence,” Mr Brownlee said.

“Of late there has been a great deal of public interest in the way in which the government manages the petroleum and minerals estates. This consultation round provides interested parties with an opportunity to have their input into the future direction of legislation that governs permitting activity.”

A backgrounder on the Crown Minerals Act and a series of detailed questions and answers, as well as the discussion paper and further information on the consultation process, is available on the Ministry of Economic Development’s website at www.med.govt.nz/CMAReview.

Feedback on the paper is sought by 5.00pm Friday 8 October 2010.

Media contact: Nick Bryant on 04 817 8273 or 021 245 8272

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Vancouver-based methanol producer Methanex Corporation said gas contracts with a number of gas suppliers from Taranaki had been finalised in the June quarter which also provided options for further natural gas supplies in 2012.

As the world’s largest methanol producer, Methanex said it estimated global demand for the chemical feedstock has surpassed pre-recession levels and had now reached all-time high levels.

Bruce Aitken, president and chief executive, said world methanol industry conditions remain healthy. While new capacity has started up in the June quarter, some higher cost capacity has also been shut in. The result has been increased balance in the world methanol market and relatively stable prices.

Methanex states it still has the potential in New Zealand to increase production of methanol capacity by 1.4 million tonnes a year by starting up the second 900,000 tonne methanol train at the Motunui plant and the 500,000 tonne Waitara Valley plant. Any such increase in New Zealand production would depend on methanol supply and demand dynamics and availability of economically priced natural gas.

Methanex has funded approximately US$9.5 million to New Zealand exploration company Kea Exploration during the June quarter to drill the Beluga-1 well near the company’s methanol plants, in return for rights to the gas at a price competitive to the company’s other locations in Trinidad, Chile and Egypt.

They are reviewing the Beluga-1 data and are in discussions with Kea about further exploration. Though the initial Beluga well was not commercially viable, early results indicate that gas may be accessible from a sidetrack well.

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Origin says in its June quarter report that the Kauri F4, F5 and F6 wells were all drilled from the same Kauri F drillsite but with deviated well paths to different reservoir target locations. Downhole Manutahi oil flows often contain sand so all wells have gravel pack completions for sand control.

The Manutahi wells lie near the Taranaki coast southeast of Hawera.
Swift Energy, which previously held the Kauri mining permit, drilled the first Manutahi oil wells in 2004.

Origin also said its comprehensive seismic reprocessing of the TAWN fields is nearing its end. The new data will be used to improve field definition and to better assess near-field opportunities. Origin project manages the central Taranaki TAWN fields for subsidiary Contact Energy.

Also, within the TAWN fields, construction of gas processing facilities has begun at the Ahuroa Gas Storage project. This will enable withdrawal of gas as well as injection. Extra gas processing capability will also be added to the existing injection facility.

The June quarter report also says that Origin has met with various delays concerning its two offshore Northland wells which were due to be drilled by the Kan Tan IV semi-submersible rig in August. The Kan Tan IV has just finished working on the Tuatara-1 well off D’Urville Island in the south of the Taranaki Basin, and is being taken back to the Tui oil field in August to carry out a workover of the Pateke-3H well.

Last year Origin said that Korimako prospect, southwest of the Manukau Harbour entrance, has a potential to contain 500 bcf of gas in Miocene and Eocene reservoirs. Tarapunga is a Pliocene-aged turbidite play north of Todd Energy’s Karewa gas discovery and has the potential to hold over 300 bcf of gas.

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AWE said minor oil shows were intermittently recorded between 1790 and 1850 metres down the Tuatara-1 well. There were also earlier reports of gas shows between 780 and 900 metres. But when wireline logs were run, no zones of economic potential were identified. Cement plugs were run prior to abandoning the well.

The final exploration well in AWE’s current New Zealand campaign, was drilled to a total measured depth of 1911 metres targeting the Moki sands within the Tuatara prospect in PEP 38524 in the southern offshore Taranaki Basin. Interest holders in PEP 38524 are: AWE 60 per cent, Roc Oil 20 per cent, Kea Oil and Gas 10 per cent and Carnarvon Petroleum 10 per cent.

AWE said earlier it will now take the Kan Tan IV semi-submersible rig back to the Tui oil field in August to carry out a workover of the Pateke-3H well which has been shut in because of a minor leak within the gas lift system. Kan Tan IV will then be used by Origin Energy to drill two wells in the Korimako and Tarapunga prospects in the offshore Northland Basin.

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That, he said, will be quite different to recoveries traditionally seen in New Zealand.

"This recovery will be patchy at times - due to the uncertain global environment and the need for businesses and households to pay down large stocks of debt."

"In this credit-constrained world, the recovery will need to come first from the earnings side of the economy such as exports," English said in a speech to the New Zealand Council for Infrastructure Development.

"All of this shows that tackling the economy's imbalances will not be a short-term task. It's not just a matter of shrugging off the global recession. The challenges we face started years earlier."

"Turning that around will require a relentless, long-term focus and commitment," English said.

This reality was reflected in stable rather than growing results for domestic industries like housing and retail, and indicators such as business confidence and the sharemarket.

Recent debate about the Government's goal of catching Australian incomes by 2025 had attracted some comment - much of it characterised by a total lack of context about the recent economic performances of the two countries.

He said in the three years to 2008, NZ's economic growth was unbalanced and sluggish. In early 2008, New Zealand went into a recession that Australia simply didn't have.

"This meant the Australian economy grew by about 11.5% in the four years to March 2010, while our economy grew just 2%."

"So the Government inherited a situation that makes the challenging target of catching Australia even more difficult. Let me stress that the Government remains committed to this target - but it's a 2025 target, not a 2011 or 2014 target."

Over the past 30 years, there had been many two year periods when NZ performed better than Australia, as dairy and other commodity prices fluctuated. But overall, the trend has been clearly in Australia's favour.

"On the commodity front, Australia clearly has the edge at the moment," English said.

"Put in simple terms, Australia's mineral industry makes up nearly 70% of its exports, while dairy makes up 20% of our exports."

"Furthermore, Australian commodity prices roughly doubled in the five years to July 2010, while NZ's commodity prices increased by only half as much."

"As a result, Australia's minerals boom is likely to mean it will perform better than NZ in the near term, but it is the long-term trend we are determined to turn around."

"The only way we can permanently lift New Zealand's economic growth is through considered and consistent reform and change, year after year."

More broadly, the Government has built its economic plan around six policy drivers. They include:

• Strengthening the tax system.
• Better, smarter public services.
• Reforming regulation.
• Education and skills.
• Business innovation and trade.
• Investment in productive infrastructure.

"In the past 18 months, we have been extremely busy rolling out policies within this plan, and you will see more announcements in the coming months," English said.
 

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Todd has farmed into the AWE-operated Parihaka permit which covers 2850 sq km along the Taranaki coast south west of the Pohokura gas-condensate field.

The PEP 51558 permit is operated by AWE. Todd acquired its stake from all three previous partners, AWE, Mitsui and Mighty River Power. AWE and Mitsui now both hold a 30% stake while Mighty River and Todd each hold 20%.

Under the work programme one exploration well is to be drilled by 2012.

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Maari partner Horizon Oil said in its June quarter report said that the long MN1 well to the Mangahewa pool in the Manaia structure was now undergoing a hook-up to the Maari production system.

The Maari platform workover unit, commissioned in early May, is enabling the restoration of Maari production levels and the post completion of development drilling operations, Horizon Oil said.

The workover unit was then assigned to the MR5 and MR3 wells, bringing them back on line as producing wells. The two wells had been shut-in for some time with pump failures. It was also used to make extra perforations in the MR7 water injection well to increase water pressure on the oil reservoir. Production and performance have both increased as a result of these workovers.

Horizon Oil said that successful use of the workover unit will also enable any downhole information gained to be used for future preventative maintenance programmes.

In other areas, the Maari partners (led by operator OMV) are currently carrying out subsurface and reservoir modeling of the various productive zones at the greater Maari field. The modeling aims to design a development scheme to exploit all the commercially viable oil and gas accumulations in the Maari permit area, building on the understanding gained through the development drilling.

The Maari field has now produced a total of 9.2 million barrels of oil up to 28 July 2010. First oil began flowing in March 2009.

Horizon Oil said early results were encouraging from the processing of seismic data from PEP 51313, in which the company has a 30 per cent interest. PEP 51313 lies immediately south and west of the Maari field.

A 204 sq km 3D seismic survey was acquired in April-May by the Reflect Resolution vessel covering the Pike, Paua and Matariki prospects that lie to the south of Maari. The survey was designed to link in with the existing 3D coverage of the Maari and Manaia structures. The 3D seismic data will help fully evaluate the three prospects for drilling in the 2011 / 2012 summer weather window.

The survey vessel also acquired two additional 2D lines over the Te Whatu and Pukeko prospects to the west of Maari in PEP 51313 to assist in the planning of a larger 2D seismic survey to be recorded over those prospects in 2011.

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The award was given to the Pohokura project for sustainable development and technical innovation recognising a number of particular features about the project.

“We are delighted to have won this award,” Rob Jager, chairman of Shell Companies in New Zealand, said on behalf of the Pohokura partners. He said the award belonged to all the Pohokura team, both past and present. “I thank them for their safety first approach, hard work and commitment.”

The Taranaki Regional Council (TRC) said that the design, development and operation of one of New Zealand's largest oil and gas resource had involved consultation with the local community and a commitment throughout the project to reducing the impact on the environment.

On of the features commended was the use of horizontal directional drilling to insert the development pipelines to the offshore field down underneath the cliff and foreshore. This enabled them to avoid excavation of the sensitive coastal environment.

The council also noted the collection and treatment of stormwater from the onshore production station via a natural bio-filter of wetland plants and ponds, which are constructed to remove any residual hydrocarbons. Riparian plantings have also been carried out extensively at the production station to protect and enhance water quality.

The production station and offshore platform are both unmanned and remotely operated. This reduced the impact on the environment. The use of energy saving variable-speed electric motors also reduces emissions from the site, the council said.

TRC says that “the awards are an opportunity to recognize some of these efforts and hold them up as an example and an inspiration.”

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Kent Exploration holds the 26 sq km Alexander River PP 51589 which is approximately 25 km southeast of Reefton on the West Coast of the South Island. The permit encompasses the Alexander underground gold mine where gold was first discovered in 1921. This historic mine produced over 41,000 oz of gold between 1924 and when it closed in 1943.

A Macraes Mining report in 1992 estimated the Alexander River prospect had a potential resource of about 4 million tonnes of ore grading over 5 grams per tonne of gold, for approximately 643,000 oz of gold. However, Kent are not treating the historical estimates in the 1992 report as reliable, as not enough work has been done by a sufficiently qualified person to classify the estimates as a current mineral resource.

Kent Exploration said in a statement to the Ventures section of the Toronto Stock Exchange that it had recently received the final results of an induced polarisation (IP) survey on its Alexander River prospect. This IP survey outlined several targets defined by chargeability highs. These occurred both near the historic mine workings and in what appeared to be a continuation of the Alexander Reef zone or a second sulphide-mineralised zone to the north.

The IP survey followed up on a trenching programme conducted by Kent in 2009, where geological consultants located and sampled most of the historic trenches and adits sampled by CRA in 1988. These trenches and adits were located along a gold-mineralised strike length of about 1.2 km that were above or within the old mine workings.

Some of the assay results from the 2009 trenching which were reported earlier by Kent included: 3.2m at 24.60 g/t Au, 6.4m at 6.87 g/t Au, and 12.8m at 4.50 g/t Au.

Kent Exploration has applied to the Department of Conservation for an initial low impact diamond drill programme to test IP anomalies and other geological targets that it has found at the Alexander River prospect.

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Wellington-based L&M Energy says the gas desorption testing of cores obtained to date show that the Morley Formation coals contain up to 11 m³ of gas per tonne.

Isotherm testing confirmed that the coals are fully saturated with gas, the composition of the gas is also excellent with methane levels between 97 - 99%.

L&M Energy says the results further support the existence of additional gassy Morley coals recoverable reserves within the adjacent Waiau permit PEP 38226. These results are not currently included in the 173PJ of 3P reserves that were independently certified late last year.

Following coring, the OM-4 well located in the Ohai PEP 38220 has been suspended as a future production well. The well found that the gassy coal from the Cretaceous Morley coal measures were over 750 m downhole, and twice as thick as the Beaumont coal measures found at around 600 m deep. A total of 40 m of coal was found in the OM-4 hole.

L&M Energy says pre-well planning is now underway for the drilling of a coal seam gas pilot production project in the Ohai permit, work is scheduled to begin in September. The company says it aims to certify the first tranche of 2P coal seam gas reserves at Ohai early in the New Year.

L&M Energy recently raised about $8.5 million for production testing and booking of 2P CSG reserves in Western Southland and further exploration drilling in the area.
 

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In April, the start-up petroleum explorer drilled its first well in PEP 51153. They discovered oil-bearing sandstones and a deeper zone with “very high levels” of hydrocarbon gasses indicating oil.

In a recent website presentation Kea says that the Wingrove-2 net pay sands have a calculated total productivity potential of 400 bopd. The risked expected rate (using Stimfrac and heated tubing) is 150-200 bopd which should yield about 200-250 mbo.

On this basis, Wingrove-1 will be re-entered and placed on production. Add this to two further production wells which will be drilled from the Wingrove site, they expect a total yield of around 1 million barrels of oil. A further exploration well will also be drilled from the nearby Oru site.

The specialist equipment required for the production testing of Wingrove-2 should arrive from overseas during the last quarter of 2010. Planning should then start for further Mt Messenger step-out appraisal wells and an active exploration program from early 2011.
 

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