Friday, June 14, 2019

Bob Edlin: Drilling programme vital to avoid importing oil and gas

The arrival of the self-propelled, 34,500-tonne offshore drilling rig COSL Prospector in Taranaki heralds an important stage in the exploitation of NZ’s oil and gas resources. 

The first task for the rig is to drill three side-track wells for Malaysian-based Tamarind at the Tui offshore field, in the expectation it can extend the life of the field beyond next year and lead to the extraction of 6-8m barrels of oil.

Then the rig is contracted by OMV, operator of the offshore Pohokura and Maui fields, to drill an exploratory well in the Great South Basin.

OMV, which also operates the offshore Maui and Pohokura gas fields, expects to begin drilling towards the end of the year – potentially using the COSL Prospector if consents are secured. OMV’s first well lies in about 1,200 metres of water 130 kilometres south-east of Balclutha. If successful, the programme potentially could involve drilling 10 wells, up to two further exploration wells and up to seven for appraisal.

The potential of the deep sedimentary rock in the Great South Basin, and the Canterbury Basin to the north, has long been recognised. There are proven petroleum systems in the region but drilling has been sporadic since the 1970s. Activity dried up after the plunge in oil prices late 2014.

OMV and partner Mitsui have been exploring in the GSB for 12 years but are yet to drill a well. Their 16,700 square-kilometre permit, extended by the government last year, expires in July 2022 and requires the drilling of a well by July 2021. If drilling is successful the permit can be extended out to 2030.

The drilling programme is a vital element in ensuring NZ’s economy does not become almost totally dependent on imported oil and gas supplies. It also offers an opportunity to boost GDP at a time when economists are warning continuing low productivity will erode living standards (and should we mention it, “well-being”?).

But not all New Zealanders are happy about the arrival of the drilling rig offshore. Greenpeace climate campaigner Amanda Larsson says the arrival of the OMV-contracted drill rig contradicts Jacinda Ardern’s declaration that climate change is her generation’s nuclear free moment.

“This OMV rig is a 34,000 tonne embarrassment. It’s come from Norway – literally the other side of the world – to search for new oil and gas during a climate emergency. I imagine the phrase on many people’s lips right now is probably WTF,” she says.

Tamarind’s Lauren Wallace, talking of the Tui Field, reports it has produced more than 40.7m barrels of crude since production began in 2007. If no further activity is undertaken in the field, it is likely that by the end of 2019, production rates from the field will be uneconomic and the assets will need to be decommissioned. The objective of the side-track wells, Wallace says, is to access a future 7.5m barrels of oil reserves from Tui.

Tamarind considers that a successful outcome of the proposed activities would extend the life of the Tui Field to 2025.

At the end of 2016, the government has received $573m in royalties from Tui Field and an additional $10.3m is forecast up to 2020.

The planned work programme will not result in any new wells being drilled into the seabed or any new structures being placed on the seafloor.

A side-track development re-enters a well from a surface location with equipment designed to deviate from the existing well bore and find oil in an alternate zone. Crude oil from the fields is pumped to a floating storage and production vessel, the Umuroa, anchored off the Taranaki coast.

Depending on the results of the first three sidetrack wells drilled, a decision may be made to drill a fourth sidetrack well.

The COSL Prospector’s arrival off the Taranaki coast is the end of a four-month journey since it left Norway in February, with stopovers in Portugal and South Africa where NZ crew members joined the vessel.

Earlier, a OMV-contracted jack-up rig completed maintenance work at the Pohokura production platform off the North Taranaki coast.

Meanwhile as climate change campaigners call for a cessation of oil drilling, NZ remains far from self-sufficient in fossil fuel production. But oil giants like ExxonMobil are planning to expand production, with the objective of lifting its own output by 25% from 2017 levels by 2025, saying it is providing the energy needed by economies and by people’s standards of living. It is about to exploit a new field offshore in Guyana which could become the second biggest oil producer in Latin America, after Brazil, transforming a poor and tiny country into a petrol state.

Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE.


Unknown said...

The anti drilling mining legislation seems to me to be the dumbest policy possible. I hear reports that import of coal for power generation are up 130%

Allan said...

When NZ's economy totally collapses, as it will when agriculture & the energy industries are all shut down to 'save the world' from a 2deg temperature rise. Will the ambassadors of GREENPEACE similarly take a reduction of living standard, or, like all good Communists, insist that as leaders, they deserve to have their lifestyle preserved or enhanced. And the fifty per-cent of the NOW generation that survive, will venture out of their caves, & say hey it's snowing in Auckland. The world will keep on spinning, & a new generation of cavemen will try to become civilized again..

Anonymous said...

Fossil fuels will contnue to be necesary. We are capable of scrubbing chimney stacks.Lets do it.
We need to make power with our rubbish as well. All rubbish in N.Z. needs to stay in N.Z.