Associate Energy Minister Harry Duynhoven today announced the results of the latest Canterbury Basin permit tender round, which closed last Friday, and said he expected to be able to announce the successful bidders within two months or so.
Bids for Blocks A and B were received from four explorers, represented by two joint ventures, with the area covered by the applications equating to approximately 18,000 sq km of the 27,000 sq km of offshore area up for tender.
No bids were received for the least prospective offshore area, Block C, nor for the two onshore areas, Blocks D and E, which was not surprising given Indo-Pacific's lack of success so far in the PEP 38252 and 256 licences.
"I am pleased with the quality of the applications received over the two most prospective blocks offered, "Duynhoven said.
"In the past, the likelihood of finding gas in the Basin, coupled with the limited South Island gas infrastructure, low gas price and lack of defined markets has limited the petroleum industry's interest in the Canterbury Basin.
"However, the changing face of the New Zealand energy industry has led the exploration community to reappraise the opportunities the Canterbury Basin has to offer. The existence of a local natural gas liquids market and the potential for gas-fired electricity generation in the South Island, provide a real opportunity for the country to develop a second petroleum producing province."
While his press release crowed about the results of the bidding round - "Canterbury petroleum exploration set to re-ignite" - the successful work programs will not fan the smouldering embers of South Island exploration into flame.
The South Island LPG market is limited and it would require at least three or four new gas-fired power stations to make a medium-sized (500bcf-plus) gas-condensate find, marginally economic. The almost complete lack of infrastructure would almost certainly preclude LNG exports, even in the event of a large, 1tcf-plus, offshore discovery.
Crown Minerals petroleum business manager Clyde Bennett told Energyreview.Net that making the results of an Anschutz Corporation gas marketing study and a Geological and Nuclear Sciences' rock study available to interested parties had resulted in the good offshore interest.
"We have some decent companies in there, from New Zealand, Australia and North America." Bennett declined to identify which companies had made bids.
However, it is unlikely Shell New Zealand has changed its mind since last October, when company chairman Lloyd Taylor said there would have to be substantial new insights to get Shell interested in the Canterbury Basin.
Its long-time partner Todd Energy is also unlikely to have bid, concentrating its exploration efforts on Taranaki.
However, up and coming explorer Indo-Pacific Energy has bid for Block B.
Indo-Pacific chief executive Dave Bennett confirmed this to EnergyReview.Net from Vancouver today.
The Canterbury basin has been only rarely explored since hydrocarbon traces were reported from the first onshore well drilled in the region early last century. Since then only 10 other wells - six onshore and four offshore - have been drilled.
The last attempt - the offshore Galleon-1 - was in 1985 when a Shell, BP and Todd consortium found uneconomic quantities of gas and condensate. The well was tested and flowed at rates of up to 10 MMSCF/D and 2240 bpd of condensate. Gas and condensate were also recovered during drilling from the more northern Clipper-1 well.
