The Kapuni-19 development well, which was recently deviated towards the eastern margin of the small onshore Taranaki field, had struck gas in the shallow Miocene-aged Mount Messenger sands, Greymouth principal John Sturgess told EnergyReview.Net today.

"It came in pretty much as prognosed and we believe the well is capable of producing about one million cubic feet of gas a day. However, we are still investigating a deeper interval, which we hope we can produce oil from."

Greymouth had already done "a nitrogen job" on the deeper zone, and would continue cleaning the well up and stimulating it to flow from the lower zone.

While he conceded gas rates of 1mmscf/d would be marginal on their own, he said the proximity of production facilities, coupled with more wells planned for the Kaimiro fault block, meant there was "good potential for further small gas finds, particularly with demand growing and gas fetching better prices."

Recent debottlenecking had also seen total Kaimiro oil production increase by about 10% to approximately 500 bopd.

Earlier this year Sturgess said Greymouth was to start its first field development program, costing about $NZ 2-3 million, since buying Kaimiro from Shell New Zealand almost year ago. Up to four in-fill wells could be drilled this year, targeting some shallow Mt Messenger bright spots identified by earlier seismic.

Early production from the field, which was discovered by Fletcher Challenge Energy subsidiary Petrocorp in 1981, was from the Eocene-aged Kapuni formation. Present production is centred on the shallower Miocene-aged Mt Messenger sands, which were discovered in 1988.

Last March Greymouth agreed to purchase the Kaimiro field from Shell New Zealand as part of the Commerce Commission's required divestments by Shell before it bought the New Zealand assets of FCE.