TOP STORY: Bay in oil hunt

2nd September 2005

JONATHAN DOW

Hawke's Bay is poised to take part in the biggest oil and gas search in New Zealand as world oil prices skyrocket.

A seismic survey of the ocean floor off the East Coast has revealed significant potential for oil and gas discovery and international companies are expected to bid for the rights to explore the area, bringing investment and employment to the region.

The results of the $15 million Crown Minerals survey were released last night by the Ministry of Energy, along with an offer of four East Coast blocks covering 100,000sq km. International companies had already expressed interest, said Associate Minister of Energy Harry Duynhoven.

The data gathered in the four blocks highlighted significant geological features which were "very encouraging" in terms of potential. They were also at a depth and location which would shorten the time to bring any discoveries to market, Mr Duynhoven said.

"While there is no certainty yet as to who may bid, I am hopeful we will have a level of exploration next year which has never been seen before in New Zealand."

Chinese petrochemical giant Sinopec had already expressed interest in exploring in New Zealand, he said.

The company which offered the best staged work programme, which would include further seismic work and drilling, would be awarded a five-year permit for that area.

One option would be for exploration companies to club together to send a semi-submersible or jack-up rig to the East Coast, drilling a well in each of the four areas over the next four years at cost of $25 million each.

A rig could be brought from Singapore or Perth and there would be opportunities for Hawke's Bay people to work on it as roustabouts and engineers.

Adam Feeley, group manager at Crown Minerals, said explorers usually gathered seismic data for the first two years then drilled in the third year but because the data was already available they could drill within 12 months. One spot 30km offshore from Napier, was "considered a very interesting anomaly".

"The results show a large structure and suggest there is an interesting possibility of gas reserves there," Mr Feeley said.

But no-one could say what the potential of the East Coast was.

"Until you drill, you can be sure of nothing," Mr Feeley said.

Mike Patrick, of the Petroleum Exploration Association of New Zealand, said he had "his fingers crossed" companies would commit to explore the blocks.

"It would create a decent economic upturn - even if nothing is found," he said. Someone had to man the rigs and further seismic surveying would be based at a nearby port.

"But if they find something, that's another kettle of fish."