Associate Energy Minister Harry Duynhoven yesterday welcomed the 525 delegates – a record for New Zealand petroleum conferences – but chided some for their negativity.

“I do not share the more negative views which some in the media and industry seem to have,” Duynhoven said.

“Success is subjective and depends on how it is measured. Exploration is New Zealand is inherently lumpy because of its size.”

Some industry critics had said that the recent Offshore Northland and Outer Taranaki blocks offers had attracted a poor response – no bids for Outer Taranaki and only two blocks awarded, both to a 50/50 Origin Energy-OMV joint venture, in Offshore Northland.

“However, success must be measured first in terms of the quality of bids, not the quantity,” said Duynhoven.

“It is critical that future blocks are awarded to well funded and technically capable explorers, who are committed to working acreage. We have succeeded in this with Northland and I am confident there will continue to be quality bids for other blocks.”

He added that his government did not “do deals” with companies seeking preferential terms of access to prospective acreage, as had been reported in some media with regard to the about-to-be opened Great South Basin Blocks offer.

All permits would be awarded with the “utmost fairness and transparency”, he said.

Duynhoven also cautioned the industry on the amount of litigation taking place. “Do we collectively want to see New Zealand develop a reputation for only settling matters via the courts?” he asked.

There had been a strong increase in exploration activity in New Zealand during the last few years. Between 2000-05 the wildcat success rate was about 16%, or 12 discoveries from 74 wildcats.

For offshore Taranaki the success rate was even better – one in three – with six commercial discoveries from the 18 wildcats drilled.

“This suggests to me that there is nothing wrong with the prospectivity of New Zealand, nor the rate of success,” Duynhoven said. “It does, however, stress the importance of more active drilling.”

He said the New Zealand E&P industry was “shifting up a gear”, with more companies with deeper pockets and access to a greater number and mix of technical skills.

Besides the top tier – of such companies as Origin Energy, OMV, Pogo and Swift Energy – there was an emerging second tier of smaller players and downstream companies moving upstream.

New Zealand had never seen so many oil and gas developments – Pohokura and Kupe gas-condensate, and Tui Area and Maari oil fields.

“These discoveries were made when oil was at US$30 per barrel or less,” Duynhoven said.

“At US$60 for oil, and with gas prices rising, there is a real incentive to find more now and to keep the bar higher for longer.”

He added that the government had introduced several incentives during the past two years, including lower gas royalties, government-funded seismic acquisition, and some leniency in fulfilling work program commitments, having regard to the tight global supply of rigs and seismic vessels. There was also the recently announced 4D seismic database, starting with the Taranaki Basin, being done by GNS Science.

“As for other initiatives, the ball is in your court. We want to see more action, rather than talk,” Duynhoven told delegates.

“A problem is not an excuse for inaction. You need to make efforts to meet work program commitments and deadlines.

“There has never been a better time for exploration and production activities in New Zealand. Prices are high and there is a growing gas market that needs to be filled.”

Later in the day, Energy Minister David Parker, in his first address to the petroleum industry since becoming minister last October, said the government accepted that New Zealand’s smallness and geographical isolation meant it might in future find it difficult to compete globally for oil and gas.

“This reinforces the desirability of finding more domestic fossil fuel reserves,” he said.

Such reserves might include not just petroleum but also lignite or brown coal.

Parker said the vast South Island lignite reserves, holding an estimated 75,000 petajoules of energy, were likely to be economically recoverable some time soon.

Converting lignite to synthetic gas – from which petroleum fuels, methanol, ammonia/urea and electricity could be produced – looked feasible. Hydrogenation and liquefaction might be close to being able to economically produce a synthetic crude that could be converted into petroleum products.

“In each of these applications, the associated greenhouse gas emissions per unit of energy produced are likely to be significantly less than from direct combustion using current technology,” he said.

But parker also said that the proportion of renewables in the electricity system had dropped in recent years and he wanted to see more renewable energy schemes.