He told the New Zealand Petroleum Conference in Auckland that several more fields the size of the 1tcf-plus Pohokura gas field off Taranaki needed to be discovered in the next few years to replace the rapidly dwindling Maui.

Without those new discoveries New Zealand might even have to look to importing LNG to make up any shortfall.

Although Shell International found New Zealand one of the most favourable countries in which to invest and do business, Warren warned it needed strong new partners to help it find those new fields, particularly in the deep water.

Pohokura was ideally placed, being in shallow water and right off the coast from this country’s largest single gas user, the Methanex Motunui and Waitara Valley methanol complexes.

However, Shell NZ had to compete with other Shell companies around the world for the allocation of E & P resources and finance. Despite this country having a wealth of skilled and experienced staff, New Zealand’s remoteness, the high cost of drilling here, particularly offshore, and the small size of the industry were problems that needed overcoming.

Sharing rig mobilisation and demobilisation costs, joint procurement and co-ordinating drilling programs could each provide possible solutions. “No one problem is insurmountable’, said Warren.

Shell’s focus would be on the larger basins with the potentially large reserves of hydrocarbons. Deepwater held greater attractions than onshore or inshore, but the technological challenges were correspondingly greater.

If there looked to be significant shortfalls in gas supply looming, then further incentives might be necessary, Warren added, hinting at such measures as tax holidays or tiered royalty regimes.

He also said the New Zealand industry would definitely be facing higher gas prices, perhaps as much as $US3 per gigajoule.

Industry commentators said Methanex would close its Taranaki plants way before gas prices reached that level, as it was not prepared to pay much more than $US1 per unit.

By Neil Ritchie.