Austral chief financial officer Bruce McGregor confirmed this morning that the Ensign International Energy Services Rig 19 had started drilling Heaphy-1, in licence PEP 38746, just after midnight. The well was scheduled to take only about eight days to reach the target depth of about 1450m in the Miocene-aged Mount Messenger-Moki formations.

The licence is adjacent to Todd Energy’s commercial McKee field, although that field produces from the deeper Eocene-aged Kapuni formation.

The PEP 38746 partners are Austral (operator 66.67%), and Tap New Zealand (33.33%). But Tap last week announced plans to withdraw from onshore Taranaki to concentrate on its offshore Taranaki and offshore Canterbury interests.

McGregor said testing of the McKee interval – the main producing zone of three Eocene-aged Kapuni intervals encountered during drilling of Cardiff-2A last year – was progressing well and that the planned program was now about half way through its scheduled 30 days.

But Austral would not be releasing any results until after it had completed this latest test program.

During first testing, the McKee interval flowed carbon dioxide-rich gas at rates of only 1-1.5 million cubic feet per day, with 30-35 barrels per million cubic feet of associated condensate, causing former company chief executive Dave Bennett to ask whether flows were being inhibited because of the way the well had been drilled, deviated, cemented and completed.

But the well has now been recompleted, paving the way for more optimal flows. Testing of the two deeper zones – the deeper K1A and K3E sands – may be possible after the McKee program to give a more complete picture of total recoverable reserves.

PEP 38738 deep (Cardiff) partners are: Austral (operator 25.1%), Genesis Energy (40%), Cheal Petroleum (15.1%), International Resource Management Corporation (19.8%).