EXPLORATION

Lack of new ideas lamented

New Zealand's oil and gas industry is becoming too "green" because of the effective "recycling" of ideas and personnel, commentators are saying in the wake of last week's Taranaki explorations blocks announcement.

Associate Energy Minister Paul Swain last Friday praised the participation of so many companies in the bidding process, saying more oil and gas discoveries should be made in the Taranaki Basin as a result of the work programs submitted.

The 21 new onshore and near-shore permits went to 19 different explorers, four of which were local companies. Of the remaining companies, seven were from the United States, six from Australia and three from Europe.

"This shows the keen interest there is in New Zealand as a place to explore for oil and gas. With more companies exploring over generally smaller permit areas than issued in the past, it is hoped this will lead to more oil and gas being found," Swain said.

However, commentators were disappointed there were only a few new players, some of which were companies formed by executives already involved in New Zealand, and, more importantly, there were no new majors bringing fresh exploration ideas and strategies. "You can be sure none bid because, if they had, they would have been allocated a permit," said one commentator.

It is known Australian companies such as Woodside Petroleum and Apache Corporation have been thinking of getting involved in New Zealand. However, it now seems this country will have to wait until early 2003, when the results of the Taranaki deepwater bidding round are expected to be announced, to find out of any new majors are coming.

Another commentator said the New Zealand industry could now be considered "green", as it was so small there tended to be lots of "recycling" - people moving from one company to another.

These movers sometimes took detailed knowledge of a company's prospect inventory with them, giving their new firm a potential competitive advantage.

"It may be a new company, but the downside is they are the same ideas. Even if they have signed a confidentiality agreement, you cannot take away people's knowledge and it is easy to 'recreate' a prospect," said the commentator.

However, Houston-based Swift Energy was a good example of one new player bringing fresh ideas, which resulted in exploration strategies that benefited the whole industry and country.

Swift Energy picked up some onshore south Taranaki acreage, which had been looked at before by other players, and had a commercial find during the first drilling venture, the Rimu-A1 discovery well.

The commentator said it was good to see some aggressive work programs for some of the new permits. However, most programs were the standard fare - seismic reprocessing or acquisition and geological and geophysical studies in the first and second years, with exploratory wells drilled in the third and fourth years.

This country desperately needs to make more Pohokura-sized (1tcf-plus) gas discoveries over the next few years to stop methanol producer Methanex leaving these shores and to prevent widespread power problems during cold dry winters.

The blocks offer would have been deemed a real success if someone like Unocal (Union Oil Company of California) had moved in; a new major bringing fresh ideas and approaches, said the commentator.

Unocal had a different drilling philosophy from many operating in Asia and, in Indonesia, had designed wells to find hydrocarbons as cheaply as possible. The more wells drilled the greater the chance of success. If the discovery was big enough it would not greatly affect the final economics if the discovery well was not capable of producing commercial quantities of petroleum products.

A third commentator said he knew of certain instances of "data trawling" in New Zealand, where companies inspected other companies' prospect files and data, on the premise of a probable farm-in. However, these firms didn't proceed with any farm-in agreement and, at a later date, when the original permit holder relinquished the licence, moved in with this "advanced" knowledge. "This is unethical," he added.

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