Crown Minerals has reported Zealand as saying the review will focus on how the New Plymouth-headquartered company can improve its cost-effectiveness for the joint-venture energy companies for which it works.

The STOS boss admits the review will create uncertainty among the 400-plus staff so management had given a commitment to communicate progress to employees as openly as possible. It is understood all staff will next month have to re-apply for their positions.

Last month EnergyReview.Net said STOS was looking likely to be the big loser in New Zealand of the worldwide Royal Dutch Shell exploration and production shakedown.

Initial industry thoughts about The Hague's worldwide EP initiative were that Wellington's Shell Petroleum Mining would be substantially downsized. Later those same commentators and others told ERN that STOS, operator of the Maui, Kapuni, McKee and Mangahewa fields, was more likely to feel the pruning knife than Shell Petroleum Mining.

And, just last month, Todd Energy chief executive Richard Tweedie said his company would, for the first time in almost 50 years, drill a well without STOS. He said Todd Energy had become sufficiently concerned about STOS' high drilling costs to have recruited its own well engineering manager/drilling manager from overseas, New Zealander Andy McGregor, for the drilling of the onshore Patea East well in licence PEP 38760.

Zealand, an English Shell executive with over 20 years' experience, told Crown Minerals that STOS had an excellent performance record, but needed to keep up with the rapid change occurring in the New Zealand energy sector.

He said STOS needed to continue to reduce the cost of its base business, particularly in relation to Maui, because that would be more acceptable to the field's owners and they might invest in projects aimed at extending its life.

Zealand, who replaced retiring general manager Chris Beath several months ago, said the review would also investigate ways to increase the value of the development opportunities that STOS' customers had in their respective permits.

The Pohokura gas-condensate discovery off north Taranaki was due for development, and there was potential to develop marginal pockets of gas in many of the licences STOS operated.

However, that would require the deployment of world-class technologies at cost-effective prices.

There was also exploration potential, including the Western Platform northwest of Maui, where the joint venture partners (Shell NZ, Todd and OMV Petroleum) were committed to drilling next year.