With 2P (proved plus probable) reserves of just 2.6 million barrels of oil and 1.8 billion cubic feet of gas, Cheal was not in the same league as the billion-dollar offshore Pohokura and Kupe gas projects, but the development was important to Austral, TAG and Taranaki, Duynhoven said yesterday afternoon when he officially opened the production station.

“The joint venture can also use Cheal and the production station, with its present spare capacity, as a platform for further developments,” Duynhoven said.

He said horizontal wells, to maximise production rates and oil recovery, were possible.

It was also possible the Cheal production station could accommodate production from further development of the northern B lobe of field or from other nearby prospects, such as the Cardiff gas-condensate field, the minister said.

More than 90%, of construction, contractors and equipment at Cheal had been sourced from New Zealand companies, mostly from Taranaki.

Austral and TAG are also partners in the nearby deep gas (Eocene-aged) Cardiff prospect, while Cheal produces from shallower Miocene-aged formations.

Austral president Thom Jewell said there was “significant potential for further upside” at Cheal and Cardiff.

“Last year’s 3D survey has opened up a lot of possible opportunities,” Jewell said.

There are presently four active wells, producing about 850 barrels of oil per day, with two more wells being drilled from the B wellsite, which would increase production to about 1200-1500bpd.

Ultimately production could be from up to eight wells at both the Cheal A and B sites, with engineering optimisation and design of the facilities allowing capacity to be increased in the future. Maximum processing capacity is about 2000 barrels per day.

Austral, TAG and the other Cardiff partners are about to test the Cardiff-2A sidetrack, after a well workover by the Parker Drilling International Rig 252 in August. A coiled tubing unit is being used to isolate the main productive zone, the K3E reservoir, prior to testing.

The Cheal partners are operator Austral Pacific Energy (69.5%) and TAG Oil (30.5%).

The Cardiff partners are operator Austral (44.9%), integrated energy company Genesis Energy (40%), and TAG (15.1%).