Everything has gone according to schedule so far for the Parker Drilling 246 rig drilling the strategic well which is targeting possibly 1tcf of gas in the Eocene-aged Kapuni formation.

The well is now about 4000m down towards the 4923m target depth that should be reached about Christmas Day.

“We have focused on Cardiff because we believe it is a good prospect, hopefully as good or better than Kupe, and the nearby Kapuni field has performed extremely well for Shell Todd and has been producing now for over 30 years,” the Genesis chief executive told EnergyReview.Net at the Cardiff-2 site today.

“New Zealand needs to find at least 150 bcf of additional gas a year just to keep pace with increased gas usage, primarily in the electricity sector that is growing at over two percent per annum and fueled by continuing economic growth.

“So success here will be great for us, our partners and the country in general.”

Genesis - one of this country’s two largest gas users - has a major stake in the offshore Taranaki Kupe gas-condensate field and PEP 38738 which contains most of the Cardiff prospect. Kupe is estimated to hold about 264 bcf of gas and Austral Pacific Energy chief executive Dave Bennett believes Cardiff could contain 1 tcf or more of gas.

Genesis is funding the drilling and testing of Cardiff-2, to a cap of NZ$15 million, in return for acquiring a 40% equity interest in respect of the deep petroleum rights in the permit and the right to purchase all gas from those reserves. It is also funding a major portion of the Kupe development and has rights for most of that gas.

Jackson said it was good the Petroleum Exploration Association of New Zealand was lobbying government to expand its narrow definition of “discovery” relating to reduced royalty rates for new gas.

“We understand the Energy Minister (Pete Hodgson) has asked for more work to be done on the tax provisions; Peanz is meeting the minister and his associate Harry Duynhoven.

“Peanz also needs to talk to (Finance Minister) Michael Cullen, as he pulls the purse strings.”

Jackson said he agreed entirely with McDouall Stuart executive director Chris Stone, who recently told ERN the government should not lose sight of the big picture and needed to encourage exploration by tax relief incentives.

“Exactly, the tax forgone by the Crown would be negligible compared to benefits the incentives would bring in increased exploration activity and, hopefully, more gas discoveries that we desperately need.

“So far, the application of tax incentives has not mirrored the promises made to the NZ Petroleum Conference last March.”

At that time, Crown Minerals promised an urgent review of petroleum legislation and later announced a reduction in royalty rates for gas until 2009, though it has recently said reduced royalties will only apply to gas from previously unknown reservoirs and prospects.

Jackson, engineering manager Bruce Cole and fuel development manager Allan Melhuish toured the central Taranaki Cardiff-2 wellsite as well visiting the proposed landing site of the Kupe liquids pipeline.