Same geology as Canterbury Basin. KATE-1 200mmbo if oil present...

Same geology as Canterbury Basin. KATE-1 200mmbo if oil present 55% GGX share.
DYOR

Search for the big one steps up
By JAMES WEIR - The Dominion Post | Saturday, 26 April 2008


Oil explorers are taking a big step toward what could be a billion-barrel oil field far off the Taranaki coast, which if successful could be a huge earner for taxpayers as well.


South Korean industrial giant Hyundai has just taken a 30 per cent stake in an exploration area in 900-metre-deep water off Taranaki in partnership with United States explorer Global Resource Holdings.

"This is a landmark deal for Global," Global chief Randall Thompson said.

"We are looking seriously for 1 billion barrels."

The partners still have much work to do, carrying out seismic exploration, and if that looks positive, trying to bring in a giant oil company as a partner before drilling a well.

"I'm excited about it and I believe it can be done," Mr Thompson said. "New Zealand has a great potential for giant reserves, in the deep water and there has never been a well drilled in deep water."

Oil is close to record prices at about US$117 (NZ$148) a barrel, indicating a billion barrels would be worth close to NZ$150 billion, less development and running costs running to the hundreds of millions of dollars.

The government takes a 5 per cent share of any oil revenues or 20 per cent of profits as a royalty whichever is greater, as well as corporate tax of 30 per cent.

The high price of oil would help significantly to attract big oil players to consider joining the permit partners, Mr Thompson said.

But partners would need to take a lot of risk, spending up to US$100 million to get a test well down, with no guarantee of success.

If the big one is found, New Zealand would get royalties and corporate taxes, up to 40 per cent of the revenue stream he estimated.

"The government and citizens would make out and you wouldn't have to pay taxes if this came in at 1 billion barrels," he said.

"You could have a tax holiday like Alaska, buddy. I'm working for you. Yes, we are looking to make money but the real winners are the citizens of New Zealand, through rents, royalties and taxes."

The deal is with Hyundai offshoot Hyundai Hysco. Getting South Korea's second biggest company, Hyundai, involved was a key aim, bringing financial muscle to the project.

As Korea's third-largest steel maker Hyundai Hysco brought "financial and technical capability to this project". It also makes floating oil-production ships.

Hyundai Hysco will help pay for seismic exploration at the end of this year. It will also pay an unspecified sum to cover past costs.

Hyundai's steel offshoot wants the oil to provide the fuel it needs to make steel for cars and ships.

The permit is vast, covering almost 56,000 square kilometres west of the Maui gas and oil field, the producing Tui oilfield and the Maari oilfield which is due to start producing next year.

If all goes to plan, the deepwater Taranaki partners would need to drill a well, costing up to US$85 million, the most expensive in New Zealand, by the end of 2010, but field development could take years.

Technical consultant GNS Science has highlighted three giant prospective structures in the permit area.

The two-dimensional seismic testing programme will cost about $5 million and will concentrate on three prospects off the Taranaki coast, called Romney, Coopworth and Corriedale.

Drilling would mean bringing in an international oil giant.

DEEPWATER TARANAKI Exploration permit: 38451. Partners: Global Resource Holdings, 60 per cent; Hyundai Hysco, 30 per cent; Randall Thompson LLC, 10 per cent. The next steps: By April 2009: acquire 3100 kilometres of 2D seismic data, costing up to $5 million. By October 2009: decide whether to drill an exploration well (or drop out). By October 2010: start drilling a well (or drop out). Potential appraisal well: 2011. Production: At least 2013?