Defence counsel Jim Farmer QC, assisted by Sarah Catz, told the court in his opening address that neither Patek, who left New Zealand to return to his native US several years ago, nor FCE subsidiary Petrocorp possessed any "inside information" on the possible size of the geological Taranaki Mangahewa structure.
Nor did they possess any inside information on the results of the onshore Taranaki deep gas study as alleged by the plaintiffs, former minority shareholders in Southern Petroleum, who claim the study showed the Mangahewa structure to be much bigger than Petrocorp portrayed during its takeover of Southern.
The fact that the commercial near-shore Pohokura, and onshore Turangi and Kowhai fields were subsequently discovered in the area covered by the deep gas study was irrelevant, as such information could not have been available in November 1995, Farmer said.
However, he did concede that Sydney-based consultants Nicholas Papalia & Associates, which did an evaluation of the Mangahewa structure for Petrocorp, were aware of speculation at that time that the Pohokura and Mangahewa fields could be linked.
Mangahewa was first mapped as a large structure by the Shell BP Todd consortium in 1959, with Mangahewa-1 being drilled in 1961. Although there were gas shows, there were also high water saturations in low porosity sandstones.
Farmer said the structures were tight and it was not known whether gas could commercially be extracted from them.
He said the commercial exploitation of deep gas reservoirs in Taranaki had a dismal history during the early 1990s, with Petrocorp being involved in at least five such wells without any commercial success. In addition, discoveries such as Tariki and Ahuroa (discovered in 1986-87) were shut-in because of a lack of markets for their gas.
However, by the mid 1990s it became apparent that new markets would emerge with the predicted decline in the Maui gas field and that methanol manufacturer Methanex Corporation was looking for future gas supplies. The deep gas study was initiated, in part, as a response to this, he said.
But by late 1995, the deep gas team still did not know whether gas could be extracted at commercial flow rates and prospect-specific fracture stimulation studies had not yet been undertaken.
"By early November 1995, the same critical uncertainties regarding Mangahewa remained as had existed at the 27 July 1995 deep gas study technical review team meeting," Farmer said.
Katz said Patek was no differently informed than other Southern Petroleum directors. Southern board papers were also provided to independent advisers assessing the deal.
The Southern Petroleum minority shareholders are seeking about $NZ23 million (about $A18.8 million) in compensation from Shell, which took over the New Zealand assets of FCE in 2001.
The shareholders argue that FCE was aware of the results of the deep gas study but withheld information about the potential of the area, which included Southern's stake in Mangahewa and in the exploration licence PEP 38459 that later yielded the 1 trillion cubic feet-plus Pohokura gas discovery.
They had claimed that Patek, a former director of both FCE and Southern Petroleum, was at a presentation on the deep gas study held at New Plymouth in November 1995, although they withdrew that allegation after travel records showed he travelled direct from Auckland to Wellington and back on that day.
But the shareholders still claim Patek knew the results of the study and that prompted him to push through FCE's compulsory purchase of Southern for NZ75 cents per share, when they claim a price of up to $NZ23 per share would have been fairer.
Shell, which is paying the costs of the High Court case, is likely to take two weeks to make its submissions.
