Shell New Zealand chairman Lloyd Taylor recently said the results of the $1 million worth of seismic shot by the Polar Duke vessel in Petroleum Exploration Permit (PEP) 38511 were not good enough for Shell to commit to any further exploration with Denver-based partner Thomasson International Ventures.

"We acquired the seismic, interpreted it, and from our perspective the seismic could not definitely establish the presence of source rock prone grabens within the licence," said Dr Taylor from Wellington.

"That's not to say they are not there, but the geology was more complicated than envisaged and the presence of high level igneous intrusives made interpretation even more difficult.

"The risk of further investment was pretty substantial, so Shell declined to elect to commit to drill. Shell has chosen not to take any equity in the permit and total ownership reverts back to Thomasson."

Industry hopes had been high when Shell NZ last September announced it was taking part in the venture - one of Shell's first exploration forays outside of the Taranaki Basin for some years - that a new frontier basin might be drilled and prove productive.

Shell NZ paid the Multiwave Geophysical Company of Norway to acquire the reconnaissance seismic in the largely unexplored region to the north of and offshore from Haast, in early September using the Polar Duke survey vessel.

Thomason was awarded PEP 38511 in July 2000 and approached Shell NZ last July after interpreting existing data and regional geology, and believing the area could be prospective for oil and gas.

Dr Taylor, who is also Shell Petroleum Mining managing director, said at that time the permit area had some geologic similarities to the Taranaki and Australian Gippsland Basins, albeit on a smaller scale.

However, he recently said the significant exploration risk remained after the interpretation of the latest seismic and that Shell would not be exercising its option to take up 100% working interest in the permit.

Dr Taylor said Shell would continue to examine the exploration potential of some of New Zealand's higher risk exploration plays, though it would concentrate on the proven Taranaki Basin.

He said it was important for all the industry players, not just Shell NZ, to continue their exploration efforts to achieve sustainability in oil and gas production in a post-Maui age.