GeoSphere Exploration director Mac Beggs says that despite near record activity levels, particularly in onshore Taranaki, it may soon be time to hit the panic button regarding New Zealand's post-Maui gas supply situation.
"This country is facing a serious gap on the energy supply side and if the industry does not respond to this urgently then we might reach panic point," he said in New Plymouth earlier this week.
"It was great to see such strong interest in the near-shore and onshore Taranaki blocks offer, which closed at the end of April. However, it was wrong to assume the successful bidders for those blocks would automatically find the new fields to replace the dwindling Maui resource before its production started to falter, from perhaps 2005, and finished by mid-2007.
"The exploration strategies which resulted in the Pohokura gas and Rimu oil finds were started in 1995 or 96, though the discoveries were not made until about four and five years later respectively.
"Given that timeframe, there may not be any discoveries made as a result of the latest blocks offer until 2006. We could bring that forward to three years, but we would still be looking at mid-2005," said Beggs.
After any commercial strike there needed to be appraisal of that discovery before any development options could be considered.
Swift Energy had fast-tracked the development of its Rimu oil find in licence PEP 38719, but that had still taken about 2 ½ years.
Shell New Zealand and its PEP 38459 partners were unlikely to decide on the preferred development option for the 1tcf Pohokura gas field until early 2003. Construction and commissioning of the $900 million project could take at least another 2½ years.
"There is no instant gratification in exploration."
Beggs added that failure to find replacement reserves for Maui in time to prevent Methanex Corporation leaving the country would mean New Zealand would be left with a shrinking gas market, down from about 270 Petajoules a year to only 150PJ or so. Methanex consumes nearly 100PJ a year, most of it Maui gas.
Such a small market would not be very attractive for explorers.
"Offshore New Zealand is really strategic, where it is more likely discoveries the size of Pohokura will be made. But the industry has not mustered the courage to drill anything for almost two years, even though, in my view, there are several prospects out there with enough merit to warrant drilling."
The last offshore well was the drilling of the Pohokura-2 appraisal well off north Taranaki in the first half of 2000.
Something was lacking, something else needed to be added the exploration equation in New Zealand, Beggs said. "We are still not snaring many new overseas players."
He said there was a real prospect of New Zealanders' lights dimming if explorers were not successful in their quest for finding replacement gas reserves.
Earlier this year Shell NZ chairman Lloyd Taylor and Todd Energy chief executive Richard Tweedie both painted a bleak picture of this country's looming energy crisis - insufficient gas supply in the post-Maui age.
Taylor said the industry was not healthy from a long-term sustainability perspective, with Maui depleting rapidly and those reserves not being replaced.
Tweedie predicted serious power supply shortfalls from 2009 or earlier if the development of the offshore Pohokura field was delayed or third party access to the Maui pipeline was denied so new gas could be pumped north to the energy-hungry Auckland, Waikato regions and parts of the Bay of Plenty.
Beggs confirmed that Lower Hutt-based GeoSphere and a new prospective partner - a Denver-based independent - had bid for some of the new Taranaki blocks offered by Crown Minerals and were hopeful of being awarded at least one permit.
Twenty-one companies, from New Zealand, Australia, North America and Europe, bid for the 20 onshore Taranaki blocks and the six offshore blocks.
The onshore blocks were close to the commercial Kapuni, McKee, Tariki, Ahuroa, Waihapa, Ngaere (Tawn), Ngatoro and Kaimiro fields, as well as the more southern recent oil discoveries at Rimu and Kauri. The six offshore blocks were on the near-shore continental shelf, including areas near the Pohokura and Maui fields and areas along the edge of the shelf. The adjacent Deepwater Taranaki Basin area, where TGS Nopec completed a large non-exclusive seismic survey last year, will be put up for another bidding round later in 2002.
GeoSphere had been associated with Houston-based company EEX Corporation in recent years. However, it now looked likely that EEX was withdrawing from its international operations and, it is believed, has or is planning to surrender its two New Zealand licences, PEP 38213 in Southland and PEP 38468 off Taranaki.
