NZOG’s 2005 annual report, released to the NZX today, said the development of the Tui Area (presently the Tui, Amokura and Pateke fields in PEP 38460) would provide a rapid payback on the initial US$200-$225 million capital outlay.
First oil flows of up to 50,000 barrels per day are expected from early 2007.
P2 reserves estimates were in the 20-30 million barrel range. But there was considerable upside potential with other drillable prospects already identified within the licence. The Tui Area would be New Zealand’s first offshore development solely targeting oil.
The Tui partners had already contracted the Diamond Drilling Ocean Patriot semi-submersible rig to drill the long four horizontal development wells, to maximise oil recovery, plus some further exploration wells, from next September.
Bids had also been received for the provision of a leased FPSO, as well as for major items of capital equipment and installation services. Oil storage capacity of about 770,000 barrels, a processing capacity of up to 50,000 barrels of oil per day and a fluid handling capacity of 120,000 barrels per day, were specified in the FPSO tender.
The final investment decision for the US$200-$225 million project was still scheduled for the end of October.
The gas-condensate Kupe field, New Zealand’s second largest undeveloped gas find after the more northern Pohokura field, would be a cornerstone project, providing substantial long-term cash flows once production started later in 2007.
Kupe production was expected to be 20 petajoules of gas, 1.7 million barrels of condensate, and 45,000 tonnes of LPG, per annum.
At contracted gas prices (confidential) and oil prices of US$40 per barrel, NZOG’s share of earnings before interest, tax, depreciation and amortisation (EBITDA) was projected to average around NZ$26 million per year for the first ten years of production.
NZOG estimated its 12.5% share of Kupe oil reserves would be worth over NZ$130 million at oil prices of only US$40 per barrel.
Kupe operator Origin Energy expected all project approvals to be in place by the first quarter of next year, said NZOG.
The Kupe development would comprise a normally unmanned offshore platform, a 30km pipeline to shore, an onshore production station, and up to six wellheads. The pipeline would transport the product stream to an onshore production station for processing.
The PEP 38460 (Tui Area) partners are: operator Transworld (via New Zealand Overseas Petroleum) 45%, AWE New Zealand 20%, NZOG (via Stewart Petroleum) 12.5%, Mitsui E&P New Zealand Limited 12.5%, and Pan Pacific Petroleum (via WM Petroleum) 10%.
The PML 38146 (Kupe) partners are: operator Origin Energy 50%, Genesis Energy 31%, NZOG 15%, and Mitsui E&P 4%.
