The Petroleum Exploration Permit (PEP) 38413 partners - Shell New Zealand, Todd Energy and Austrian firm OMV Petroleum - now have only two months to decide if further appraisal of the field is warranted.

If the result is favourable and the partners commit to more capital expenditure, then an appraisal well may be drilled after the next offshore Pohokura well later this year. If the partners decide against further work, then the licence is likely to be relinquished before the December 2002 "drill-or-drop" deadline.

"It's coming down to crunch time in terms of the licence, the duration and a commitment to further appraisal and or develop the field," said. Shell NZ chairman Lloyd Taylor in Wellington recently.

"If we want to appraise then we have, in the next six to eight weeks, to commit to drilling as a joint venture. The next couple of months will flush it out one way or the other."

Dr Taylor said he understood all the participants agreed that development options were not sufficiently robust without further appraisal work. "The question remains, is further appraisal warranted?"

He said though the joint venture had not yet agreed to any further capital expenditure, options being considered by the partners including drilling at least one appraisal well on the back of the appraisal programme for the more northern offshore Pohokura gas field.

This latest news contrasts with what then Shell NZ petroleum manager Martin Trachsel said in early 2000, that Shell believed an economic development of approximately 40 million barrels was possible, even at low oil prices, based on production from the Maari prospect alone, and without input from the nearby Pike prospect, also within PEP38413.

There was considerable upside potential through further exploration of Pike and appraisal within Maari, Trachsel said, with Shell believing Maari could be developed by 2002.

Shell hoped for a fairly aggressive 24-month development timeframe for the $US100-200 million project, though a key part of the development proposal would involve sharing the existing Maui B floating production storage and offloading vessel Whakaaropai.