Associate Energy Minister Harry Duynhoven said he was pleased with the quality of the work programs submitted for the two new permits and that the Canterbury Basin offered real potential as a possible second petroleum producing province after Taranaki.
"With the changing New Zealand energy industry, higher gas prices, a local gas liquids market and the potential for gas-fired electricity generation in the South Island, this offers real potential."
Commentators say it is encouraging two medium-sized Australian explorers are still investing in New Zealand exploration while Royal Dutch Shell is pulling out. However, they say any offshore Canterbury hydrocarbon finds will have to be big, at least 1Tcf of gas, to prove commercial because of the South Island's very limited existing energy infrastructure, mainly LPG storage facilities.
Tap and AWE have been awarded a 6647 sqkm licence PEP 38 259 in the southern section of the basin off the Otago coast from north of Oamaru to Dunedin; while Indo-Pacific Energy and TAG Oil have been awarded the 10,950 sqkm northern licence PEP 38 258, predominantly offshore from south of Timaru to south of Christchurch.
Duynhoven said Tap and AWE had proven track records of finding and bringing to development major offshore hydrocarbon fields. Perth-based Tap holds interests in six onshore Taranaki permits, while Sydney-based AWE holds interests in three Taranaki petroleum permits, including the recent offshore Tui oil discovery.
Tap and AWE's work program provides for the reprocessing of 1500km of existing seismic data, reservoir characterisation and geochemical studies with special emphasis on the Galleon South and Barque prospects. A well is planned for the third year.
Indo-Pacific has interests in 10 New Zealand exploration permits, one of these being the adjoining onshore Canterbury permit PEP 38256. Vancouver-based TAG Oil subsidiary Durum Energy is associated with Indo-Pacific in two local exploration permits, one in onshore Canterbury and the other offshore Taranaki.
Their work program involves the compilation and evaluation of maturation and source rock data, the determination of a hydrocarbon charge model, basin modelling of oil expulsion efficiencies and migration modelling, reprocessing of 250km of seismic data, remapping of stratigraphic and structural traps along the Clipper sub-basin, with possible acquiring of 3D seismic data and a well inside four years.
Exploration activity in the 1980s led to the discovery of gas and condensate in the Galleon-1 well, south-west of Oamaru, which flowed of up to 10 million cubic feet of gas and 2240 barrels of condensate per day. Gas and condensate were also recovered during drilling from the Clipper-1 well located further north in the basin.
Indo-Pacific chief executive Dave Bennett said the Canterbury Basin had many geological similarities with the Taranaki Basin, but was only lightly explored, with only eight modern exploration wells, four onshore and four offshore. "The Canterbury Basin has excellent exploration potential, and may hold the key to addressing New Zealand's burgeoning energy supply crisis."
