“The bid round for the East Coast North Island will be a good litmus test for the government and for the industry. It will show if current government policy settings are right,” PEPANZ executive director Mike Patrick told EnergyReview.net today.
“If the government does not get a good response then they need to ask what else needs to be done to attract players here.”
Patrick said the disappointing results of the recent Outer Taranaki – where no bids were received for three blocks – and Offshore Northland – where only two new permits were awarded out of a possible five – should have sounded a warning that outstanding regulatory and fiscal regimes were now necessary to offset New Zealand’s perceived poor prospectivity and distance from major EP centres.
“My personal view is that they should not have any minimum work program requirements; then you know all the interested parties and, if no acceptable bids are received, then at least negotiate.
“With no minimum work program requirements, then at least you should get more seismic done, which would add to the existing information about prospectivity, if not wells drilled at a later stage.
“Better that than receive no bids that meet minimum requirements and have vast stretches of ocean where nothing is done for several years.”
Patrick said the Ministry of Economic Development Crown Minerals unit had spent time and money acquiring a major 3D offshore East Coast seismic program last year and offered the results freely to interested parties.
That survey was the first of a NZ$15 million package of incentives aimed at promoting international exploration in New Zealand's frontier petroleum basins.
He also said several gas discoveries had been made on the East Coast, though none had been developed, so it was known there were hydrocarbons present.
Industry sources have told ERN there is likely to be some interest in the four offshore East Coast blocks on offer, with a multi-million liquids find being the most attractive scenario.
“I am sure people will be looking at the East Coast, but any development will require lots of liquids, not gas,” said one.
However, they doubt there will be many bids for the seven Offshore Taranaki blocks, which one described as “the leftovers” of previous bidding rounds.
Patrick, however, said most Offshore Taranaki blocks were attractive as they were adjacent to existing commercial fields and Taranaki had the added advantage of under-used existing infrastructure.
Crown Minerals group manager Adam Feeley has told ERN that his group is aware of industry concerns and is sympathetic to calls for leniency in work program commitments, given the tight global market for rigs, seismic vessels and ancillary equipment.
Crown Minerals business systems and development manager Mike West told ERN today that announcements regarding Offshore East Coast and Offshore Taranaki would be made following the completion of the assessment and selection process.
“As with previous blocks offers, details of the bids recieved and the companies involved will remain confidential until the selection process is complete.”
