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New Zealand Engineering 1998 May

Oil and Gas Exploration Scene

Brad Field is programme leader, Sedimentary Basin Studies, Institute of Geological and Nuclear Sciences Limited

About $300 million will be spent on oil and gas exploration in New Zealand over the next two to three years, due largely to the Government's favourable exploration permitting policy. New Zealand has to compete internationally for exploration dollars and it seems that policy revision three years ago is now bringing big benefits to our associated service industries and our chances of reducing the need for oil imports, while bolstering our future gas reserves. It costs $2-3 million to drill a well onshore and perhaps five times that for a well offshore or for a 3D seismic survey. This industry-funded research will greatly improve our knowledge of New Zealand's petroleum systems.

Specialist engineers are involved at most stages of hydrocarbon exploration and production, from well, platform and pipeline design, safety and environmental concerns, drilling fluid mechanics, to well logging and enhancement of reservoir rock permeabilities. The decisions they make affect whether fields are classed as economic, the lifespans of producing fields and cash flow projections of exploration and production companies.

In the six months to February 1998 eight petroleum permits were issued and a further six were under consideration. Most activity is in Taranaki but there has been an upsurge of interest in the east coast and further evaluations of Northland and the Great South Basin are planned. Fletcher Challenge Energy plans to drill 20 wells in Taranaki - its biggest exploration push so far - and complete a $20 million seismic survey. Enerco New Zealand and Westech Energy New Zealand plan to drill three shallow wildcat holes near Wairoa and currently have most of offshore east coast under permit.
Source
Successful exploration depends on having a rock containing a few percent organic matter (a source rock) being buried sufficiently deeply so that it becomes hot enough to convert the organic matter to oil or gas. This must occur to the extent that it can overflow the pore spaces in the source rock and migrate to a place where it can form a more concentrated accumulation, in a porous reservoir rock (eg. sandstone) capped by a seal rock (eg. mudstone).

Whether the accumulation is commercial depends on many factors, such as the volume trapped, how readily it can flow out of the reservoir rock, how isolated the find is from a refinery or infrastructure, whether it is oil or gas, the company's strategic priorities and budget, what the government's exploration regime is, and the political stability of the country. New Zealand is fortunate in offering a variety of risk options ranging from a producing basin (Taranaki) through to true frontier regions (eg. offshore Northland), a favourable government exploration regime and, by international standards, a stable political environment.

The main public source of current information about who is exploring where for what, is the Crown Minerals division of the Ministry of Commerce, Wellington. Their magazine Petroleum News has just been replaced with monthly news sheets (by fax, post or email) and a quarterly report on permits and activity. These sources of news are provided generally free of charge and are available on the Ministry's web site (http:/ www.moc.govt.nz/resdata/cont.htm). The Ministry organises biennial international petroleum conferences - this year's was in Queenstown - for all participants in the industry, covering political, exploration research, engineering, environmental, legal and economic aspects.

The conference proceedings volume provides interesting insight into many facets of the industry.
Data libraries
The Ministry manages three sources of data that are of vital importance to hydrocarbon exploration in New Zealand: the petroleum report, well sample and data tape libraries. The Government requires all permit and licence holders to lodge copies of reports and duplicates of rock and fluid samples recovered from wells, and these (following a period of confidentiality) become available to other companies and to researchers. This policy has led to the building of a unique springboard of marvellous value for companies new to New Zealand wishing to reassess old licence areas, as lessons can be learned from previous failures and new concepts of exploration can be applied to existing data.

The main upstream hydrocarbon exploration research organisation in New Zealand is the Institute of Geological and Nuclear Sciences. It is contracted by the Government to do research worth about $2 million a year in sedimentary basin analysis and petroleum geology (http://www.gns.cri.nz). Major products from this research have included regional syntheses of our major basins, through to more focused studies within basins. The regional studies assist overseas (and New Zealand) companies to gain overviews quickly and to see the context of their specific permit areas. Recent research, in collaboration with the private sector, has modelled both volumes and timings of hydrocarbons generated in Taranaki Basin and the timing and paths of fluid migration, a major advance in New Zealand petroleum geology.

The main government funder of research, the Ministry of Research, Science and Technology (MORST) is currently calling for submissions to its Foresight Project (http://www.morst.govt.nz foresight/front.html) which aims to set government-funded research priorities from the year 2000 onwards. The main hydrocarbon exploration industry lobby group is the Petroleum Exploration Association of New Zealand (PEANZ), headed by executive director, Russell Plume.

For an insight into an international petroleum correlative of IPENZ try the web site of the American Association of Petroleum Geologists (http://www.geobyte.com/infoserv.html) and associated links.