Last October the Perth-based company said Galleon South-1 was its most significant New Zealand well and only NZ offshore venture, and was scheduled for drilling perhaps mid-2005, targeting a possible 2 tcf gas and 100 million barrels of condensate.

But it now says the Barque prospect in the same permit is its main offshore focus and that prospect could contain up to 5 tcf of gas and 500 million barrels of oil-condensate. The lease is jointly held by Tap and Australian Worldwide Exploration in a 50/50 partnership.

This would be the first South Island oil rig venture in 20 years. A BP, Shell and Todd combined venture capped the Galleon-1 test well in 1985.

In 1985, the Galleon South prospect, adjacent to Galleon-1, returned test flows of 2200 barrels of oil per day and maximum test flows of 10 million cubic feet of gas for the consortium, according to NZ newspaper the Christchurch Press.

It was capped as uneconomic, but with the demise of Maui reserves and withdrawal of Shell from exploration in 2003, Galleon South could now be economically viable.

Tap Oil New Zealand asset manager Clyde Bennett told the Christchurch Press that costs had been estimated at $A5 million to bring a rig to New Zealand and a further $A10-$A15 million to drill.

Bennett said no contract to lease a rig had been signed, but there was potential to co-hire a rig with other companies.

The newspaper reported that Tap Oil had visited both Dunedin's Port Chalmers and Timaru's PrimePort last year. But a final decision on where the company would be based depended on whether the northern Barque or southern Galleon prospects were drilled.

A sticking point for the oil and gas industry is the lack of infrastructure in the South Island to process any gas finds.

But Bennett said if Tap found commercial reserves it would consider returning the gas into the prospect and taking the oil.

This year, Tap is targeting 50 million barrels in Western Australia's offshore Carnarvon Basin alone, from where 98% of its current production of 6000 barrels of oil per day comes.

Most of this year's drilling will focus on the Carnarvon Basin, "but one very large target offshore well" is scheduled in New Zealand waters in the Canterbury basin, AAP reported this week.

Tap’s latest investor update last week said the company was expecting 2005 to be a record exploration year with up to 31 wells drilled in the offshore Carnarvon Basin and four in New Zealand.

The NZ prospects are Barque-1 and three onshore Taranaki wells with the potential to contain 1 to 4 million barrels - Kakariki-1 (PEP 38748) in early February, Takahe-1 (PEP 38744) in April, and Supplejack-1 (PEP 38741) in June.

Tap also said it was aiming to participate in one or two “very high impact” wells each year, with success from just one bringing a “step change in value” for the company.