NZOG told the NZX yesterday that the MED Crown Minerals unit had given it “a short window” in which to make a decision to “drill or drop” in its offshore Taranaki block PEP 38478 that includes the high-risk, high-reward Mangatoa prospect.
NZOG company secretary Brian Roulston told EnergyReview.net yesterday that the MED letter came a week after the "drill or drop" deadline of May 31.
NZOG had been having ongoing talks with Crown Minerals about several issues, including a possible extension to the permit’s work program as it was difficult to get offshore rigs to New Zealand because of high global drilling activity.
The NZOG statement to the NZX said there were "three substantial parties actively considering involvement in drilling of the Mangatoa prospect". Roulston declined to name the parties but said they were “prominent E&P companies” – one overseas and two New Zealand companies. An outcome might be known within a few weeks.
“Although it has its risks, Mangatoa is a large prospect and the present gas shortage in the country makes it more imperative to test and evaluate such prospects sooner rather than later,” said the NZX statement.
Earlier this year NZOG, which jointly holds the licence with Origin Energy, upgraded its estimate of Mangatoa’s possible gas reserves from 2 tcf to 3 tcf.
Last month Perth-based Bounty Oil & Gas said it had called in the Ombudsman’s Office in its fight to keep Crown Minerals from revoking its Great South Basin licence PEP 38215.
Bounty’s March quarterly report said Crown Minerals had not agreed to its requests for a time extension to allow mapping to be completed and a well drilled by mid-2006. Bounty believed it and partner Albatross Energy (10%) were being unfairly treated given the MED’s possible revocation of the permit.
It is known the NZ energy industry thinks the tighter MED stance regarding work program commitments is good when used to prevent partners just sitting on good exploration acreage. But many have told ERN the MED needs to be more flexible, given the tight global exploration scene for rigs and equipment.