Indo-Pacific chief Dave Bennett said without a flow test and after experiencing some drilling problems in the lower section of the hole, one should not jump to conclusions.
The Huinga-1B well in onshore Taranaki has struck oil and logging of the targeted Kapuni sands section of the well should be completed by tonight, with flow testing possible by the weekend.
"While this is interesting and encouraging news, no decision has yet been made to flow test," said Bennett in Wellington.
Any flow testing could take up to a week and would only be done if the partners were confident the well could be made to flow oil and gas at attractive rates, Bennett added.
He said high gas levels and some oil shows were encountered as the well went through the increasingly fractured basement overthrust. But after the well had gone through the basement and into the Eocene-aged Kapuni formation, it hit drilling problems and had drilling mud losses into the sandstones.
Several kilograms of thick waxy crude, a typical Taranaki oil, has been recovered as a coating on logging tools and cables, and as waxy lumps in the drilling mud. This was after the well, in PEP38716, had broken through the Murihiku Supergroup basement thrust which was prognosed to overlay the prospective Tertiary section.
Shares in PEP 38716 partner Australian Worldwide Exploration jumped A7c on the Australian Stock Exchange after opening at 69c yesterday after the company announced the oil shows at Huinga-1B. It closed at 75c on the day and was trading at 76c at press time on Thursday.
AWE said the well had reached its target depth of 4500m, with good oil shows being recorded. Several sandstone beds were intersected within a gross 120m section of Kapuni sediments. Good oil and gas shows were recorded over the bottom 250m of the well.
Discontinuities and ledges deep in the well had prevented logging equipment testing the last 130m of the well, to test the level of oil and gas in the Kapuni formation, but those problems should soon be overcome. The first two logging operations had been unable to pass below 4371m and the hole was currently being conditioned so that logging could continue.
It remained unclear exactly where the oil was coming from, but it was encouraging that they had lost high rates of drilling mud into the fractures, Bennett added.
Huinga-1B is being directionally drilled from the existing Huinga 1 well bore, to target the Tariki sandstones and Kapuni group sandstones at a location approximately 550 metres west of the Huinga-1 well site.
Recent media reports have highlighted the fact that Huinga is close to the nearby commercial Waihapa field, which has produced over 27 million barrels of oil.
However, Bennett said no analogies could be made between the two fields as they were quite different.
The Waihapa field produces from the more shallow fractured Tikorangi limestones and is on the Tariki-Ahuroa-Waihapa-Ngaere (Tawn) thrust belt, while Huinga is on the eastern margin trend. The prospectivity of this trend has been established by the Rimu and Kauri discoveries, and further enhanced by the results of the recently drilled Makino-1 well.
Having the Waihapa production station and pipelines nearby will, however, aid any development decision should Huinga-1B prove commercial.
Bligh Oil & Minerals NL subsidiary Marabella Enterprises Ltd holds a 24.8% interest in PEP 38716 and acts as operator for the permit. Other partners are: Preussag Energie GmbH (24%), Swift Energy NZ Ltd (15%), AWE (New Zealand) Pty Ltd (12.5%), Indo Pacific Energy (NZ) Ltd (7.3%), Pancontinental Oil & Gas NL (6.6%), PEP 38716 Ltd (5%) and Springfield Oil and Gas Ltd (4.8%).
Bennett also said over 200,000 barrels of oil from the Goldie-1 discovery well, within the Ngatoro mining licence PEP 38148, had now been produced and sold.
As well, Indo-Pacific had been awarded onshore Taranaki permit PEP 38741, which covered 50% of the area originally held by Indo-Pacific as PEP 38720 and relinquished late last year. PEP 38741 incorporated the Waitoriki deep gas prospect, which could be drilled from the existing Clematis-1 well site.
