Sydney-headquartered Horizon, which has a 10% stake in PEP 38413, told the ASX today that its board had made a positive financial investment decision (FID) to proceed with the development.
Horizon said that on September 16 the Maari joint venture filed a Petroleum Mining Permit application with the New Zealand Department of Economic Development unit Crown Minerals for a 25-year mining permit and expected that permit to be granted next month.
“Confirmation of the decision by Horizon Oil to proceed with development of Maari field is an important milestone for us,” said Horizon Oil chief executive Brent Emmett.
“We believe the technical risks associated with the development have been eliminated or minimised by way of a thorough design and planning process and cost exposure has been reduced by obtaining fixed price tenders for the key capital components.”
Emmett said the project was financially robust and, as announced in August, Bank of Scotland subsidiary BOS International would provide a comprehensive project finance facility, incorporating senior debt completion support and hedge instrument financing, of up to US$40 million.
“This will be a quality development of the largest oil accumulation offshore New Zealand with, in our judgement, considerable upside potential beyond the stated reserves," he said.
“Once we have received FID advice from the remaining joint venturers, we shall provide shareholders with full details of the development.”
Though Maari was discovered in 1983, low world oil prices precluded its commercial development until this time. It is about 80km off Taranaki in 100m of water and fully appraised, with four wells drilled into the structure.
The primary reservoir and the initial focus of the development plan is the Moki formation, which flowed over 3650 barrels of oil per day in the Maari-1 test. Estimated proven and probable reserves in the Moki formation are approximately 50 million barrels of recoverable oil.
Horizon has previously said the development plan is either a jack-up drilling and production unit (DPU) with a floating storage and offloading (FSO) vessel; or a minimal facilities wellhead platform with a floating production storage and offloading (FPSO) vessel.
Horizontal wells and a waterflood scheme are preferred. The development may also include the flexibility to tie-in the Maari M2A level reservoir and the separate nearby structure where the Maui-4 well flowed oil at the time of the original 1969 Maui field discovery.
Design and construction of the Maari project is planned from late 2005 with production coming onstream from 2007.
EnergyReview.net could not contact the other Maari partners today.
The PEP 38413 partners are: operator OMV NZ (69%), Horizon Oil (10%), Todd Petroleum Mining (16%) and Cue Energy (via Highlands Oil & Gas (5%).
