Operator New Zealand Oil & Gas today reported that there had been almost no drilling progress since last Friday because of a washout in the mud motor. The well was still at a depth of 2613m in an 8 1/2 -inch hole.

The washout occurred shortly after running into the hole with a new drill bit, allowing drilling mud to bypass the bit, which heated up and melted to the bottom of the hole. The drill string also twisted off.

However, NZOG exploration manager Eric Matthews said from Auckland that the drilling frustration should be over by Tuesday and the 3000m target depth reached by the weekend.

"The well is behaving itself geologically; it's looking very sensible; we just need to get to the target and see what the story is. Everything is making sense.

"We have had some minor shows, but nothing of significance, which makes sense since we have not hit the targeted Kapuni C sands."

Opito-1 is a rank wildcat and the first exploration well to be drilled in PEP 38729. It is being drilled from a coastal drilling site and is targeting the Kapuni C Sands at approximately 2850 metres depth. The estimated potential recoverable oil within the mapped closure of over 44 sqkm exceeds 200 million barrels.

Matthews said drilling so far had confirmed modelling of the Opito structure and elevated pore pressures had been encountered as expected. This indicated an effective seal to the trap.

The upper part of the bit had been retrieved and the drilling contractor was milling the remainder of the bit. Once the hole was cleared, the Century Drilling No 2 rig would continue drilling to the 3000m target horizon.

"While we have had successes in Australia, our last commercial strike in New Zealand was the Ngatoro oil discovery of 1991. So it's about time we had more success this side of the Tasman."

Matthews has earlier said that oil from a commercial strike at Opito would probably be trucked south to New Plymouth for storage before being shipped out of Port Taranaki.