“The accepted definition of an exploration or wildcat well is a decision to drill into a prospect without prior knowledge of the contents of the underlying rock structure. So, there is no way wells like Radnor-1 and Cardiff-2 can be called discoveries; they are appraisal wells,” one commentator told EnergyReview.Net today.
“Radnor should have been called Stratford-2 because Petrocorp took out a mining licence over the Stratford field from 1983 to about 1988 and put Stratford-1 on production test for several years,” said a second.
PEP 38738 (Cardiff-2) and PEP 38752 (Radnor) were keenly sought after in the last licensing round because they had known producible hydrocarbons. They were highly valued as lower-risk blocks, particularly at times of high oil prices, and were not bid for in the hope that lower gas royalties would apply to any commercial finds, he added.
ERN yesterday reported that some explorers were aghast at how the revised Minerals Programme for Petroleum had turned out, with the revised restrictive definition of discovery seeming to exclude all but rank wildcats.
“It’s crazy; they (Crown Minerals) started with the minimum they could to encourage more exploration, now they have made that even less,” Austral Pacific Energy boss David Bennett told ERN.
Bridge Petroleum executive director Kevin Johnson said he was very disappointed with the “new” definition of discovery which seemed to exclude nearly everything.
A Crown Minerals spokesman told ERN that the intent of the new royalty regime announced in June had not changed and confirmed the Bridge Petroleum-Westech Energy Radnor find would not be classified as a new discovery and thus eligible for reduced royalty rates. Neither would Austral’s Cardiff-2 well, which was essentially a redrill of previous Shell wells.
“The government is comfortable with the existing level of exploration going on in onshore and near shore Taranaki but wants to kick-start some serious exploration in frontier regions like the Western Platform,” a third told ERN.
“The government is looking for companies to explore large wildcat prospects, though I do believe a case could be made for new, deeper or shallower, producing formations within known prospects to be classed as new discoveries,” he added.
Earlier this year the government announced it would be reducing royalties for gas discoveries from June 2004 to 2009 - the ad valorem royalty would drop from 5% to 1%, while the accounting profits royalty would reduce from 20% to 15% on the first NZ$750 million gross sales of petroleum offshore and the first NZ$250 million for onshore discoveries.
