Only a few months ago Austral Pacific Energy (45% equity) and its partners Tap Oil (30%) and IRM (25%) were awarded a 15-year petroleum mining permit for their small onshore Taranaki field. The partners had estimated that the single producing well drilled so far would produce about five petajoules of gas.
But now they have no gas to deliver to NGC, the transmission company that only three months ago commissioned a $9 million production station and a pipeline to take the field's gas, according a report in the Taranaki Daily News.
The well flowed up to six million cubic feet a day shortly after its discovery. But by November this had fallen to around 500,000 cubic feet, and now the flow has dropped even further, and the operator is admitting that the well can no longer maintain commercial production.
Austral Pacific will shut the well in for an extended period to allow pressure to build-up, which could encourage Kahili-1 to flow again.
Austral Pacific chief executive officer Dave Bennett agreed Kahili-1 had not met expectations.
"We're disappointed – there's no beating about the bush over this," he told the newspaper.
"The reasons behind it all are not easily understood. At the start, several reservoir engineers studied Kahili and produced their gas flow analyses, and they all predicted fairly similar performance profiles. But it hasn't happened – and the reasons are now a matter of debate."
Bennett said the joint venture was looking at various options to get the field back into production.
Earlier this year, NGC made a $2 million prepayment to the Kahili partners in return for access to a proportion of the field’s gas for the duration of the field's life. It also spent $9 million building a production station and laying 12km of connecting pipelines.
NGC external relations manager Keith FitzPatrick told the newspaper that his company was disappointed the Kahili field was not performing to expectations.
While the plant was now lying idle, FitzPatrick said it could be used for other purposes if necessary
"It doesn't necessarily need to be devoted to gas from Kahili – the production station is skid-mounted, so it is portable,” he said.
"But we haven't written the field off yet."
