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Small Oil Find At Tui-1

A small oil discovery has been made in the Tui-1 well, PEP 38460, after reaching a depth of 3,903 m, in the offshore Taranaki Basin.

Australian Worldwide Exploration Managing Director, Bruce Phillips, said even though the result was not the "bonanza we were seeking at Tui", it was a positive result for AWE shareholders. "The discovery is currently believed to be a small oil field with the possibility of increased size with further appraisal drilling", Phillips said.

Elevated cuttings gas and hydrocarbon fluorescence were observed over the uppermost 20 m of the secondary objective Kapuni 'F' sands encountered at 3,655 m. Subsequent evaluation of the wireline data, including MDT fluid sampling, indicated a gross oil column of 10 m, of which 100% is net oil pay in good quality reservoir rocks.

"The first primary objective of the well, the Kapuni 'D' Sands, were encountered slightly high to prediction but were associated with only minor oil shows and low levels of cuttings gas", Phillips said on February 12th. "As expected, subsequent wireline logging confirmed that no producible hydrocarbons were present in this interval."

New Zealand Oil and Gas Exploration Manager, Eric Matthews, said the presence of oil, rather than gas, had upgraded the other prospects of the block. The well was plugged and abandoned, as planned, after logging was completed.

The joint venture, comprising New Zealand Overseas Petroleum (operator and 45%), NZOG (20%), AWE (20%), and Pan-Pacific Petroleum (15%) is now considering the immediate acquisition of 3D seismic over the field to identity possible appraisal drilling locations later this year.

Polar Duke Acquiring Maui Field Seismic

The Polar Duke seismic vessel is carrying out a 1,800 km 2D seismic survey in the Western Platform acreage of the Maui field for Shell Todd Oil Services (STOS).

STOS Senior Geophysicist, Karl-Heinz Zelt, said the company believed there was potential for significant oil and gas prospects in the area. "If we are successful, we could use existing Maui facilities for production", Zelt said.

JV parties in the acreage, Shell Petroleum Mining, Todd Petroleum Mining and OMV(NZ), have committed to a three-year work programme. To meet requirements, they must acquire a minimum of 1,600 km of two-dimensional seismic data this year, drill an exploration well next year, and study well results the following year.

Zelt said favourable weather conditions were vital to the survey's success. "Adverse weather conditions can mean wind and wave conditions that create too much noise, which results in reflections that cannot be clearly detected", he said. "It is important that STOS obtains high quality seismic data to enable our geoscientists to build up an understanding of the geology beneath the seabed to help identify any potential oil and gas traps."

Exploration Asset Holder, Simon Eaton, said STOS would be evaluating 'kitchen' areas where source rocks generated hydrocarbons to determine whether they were buried to a sufficient depth to receive and expel oil and gas.

The Ministry of Economic Development awarded STOS and joint venture partners, Shell Exploration NZ Ltd, Todd Petroleum Mining company Ltd and OMV (NZ) Ltd the right to develop offshore permits PEP38481 and PEP38482, known as the Western Platform acreage, in August 2002.

The Multigeophysical Company was contracted by STOS to acquire the survey.

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Carbon Credits Used To Help Fund Two New Wind Farms

The New Zealand Government has allocated carbon credits to assist with the construction of two proposed wind farms, ensuring they will be economically viable.

New Zealand Energy Minister, Pete Hodgson, said the allocation of the credits was a way for the government to support the development of renewable energy by making use of the opportunities created by the Kyoto Protocol. "These wind farms could be commissioned in 2004 and 2005, helping to meet New Zealand's need for new electricity generation capacity in a sustainable way."

The projects are TrustPower's proposed 36 MW extension of its existing 32 MW Tararua wind farm and a new 40 -80 MW wind farm proposed by Meridian. They would roughly triple New Zealand's current wind generation capacity of just under 40 MW.

Under its climate change policies the government plans to use some of New Zealand's carbon credits to recognise the climate change benefits of new renewable energy sources. A projects mechanism to enable this is being developed and will be trialled later this year.

"Electricity from these wind farms would avoid some gas or coal-fired generation, with its associated greenhouse gas emissions", Hodgson said. "That is clearly in New Zealand's interests, but the initial costs mean that the wind farms would probably not proceed without the credits the government is offering. Providing the credits therefore helps us meet both our climate change and our energy security objectives."

Promissory notes for Kyoto Protocol emission units would be allocated to the companies depending on the final amount of generation involved. The wind farms could deliver emissions reductions of up to 1 MMt of carbon dioxide over the protocol's first commitment period 2008-2012.

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Cheal Flow Testing To Start

Production testing of gas and oil bearing sands at the Cheal site (PEP38738) in the onshore Taranaki Basin, was expected to start late March, according to Indo-Pacific Energy.

Two wells, Cheal-1 and Cheal-2, will be flow tested to establish proven reserves, after both produced gas and oil at economic rates when originally tested in the mid 1990s. A statement from Indo-Pacific said the rapidly strengthening New Zealand gas market had made the field a viable development project.

Following these production tests, a Cheal-3 well will be considered. Cheal is situated near several gas markets and infrastructure pipelines. A farmout agreement has been entered into with IRM (Malaysia) Inc, a company associated with Claire Energy Pty Ltd, which will see them fund 44% of the Cheal production tests and a following well, in order to acquire 33% interest in PEP 38738. Following this deal, Indo-Pacific's equity in the permit will become 33.5%.

Meanwhile, a 3D seismic survey of the onshore Taranaki Basin, including PEP 38741, PEP 38748 and PEP 38761 was 50% complete on March 4th. "Field conditions for the survey were excellent, hence seismic data quality is good", according to the Indo-Pacific statement. "Indo-Pacific is confident that this high quality data will enable the identification of any potential drilling targets within the area."

The seismic survey vessel 'Polar Duke', which was in New Zealand waters working for Shell, recently completed a 48 km seismic survey over the Amanda prospect in Indo-Pacific's offshore Taranaki permit area PEP 38480. "Weather conditions for the survey were excellent; and high quality data were acquired, which will be AVO processed to define evidence for gas within the Kapuni reservoir sands in Amanda, as at Pohokura", the statement said.

Indo-Pacific announced that the Kahili marketing study had identified three main options for the sale of gas from the Kahili field and marketing proposals were being obtained from the parties involved. "It is expected that the Kahili field will be in production in the latter part of 2003", the statement said. "A recent pressure survey in Kahili-1A/B provided the basis for a substantial upgrade in reserves."

"Laboratory analysis of the well stream reveals that, in addition to nearly 40 bbl of condensate per Mcf of gas, there are also some 35 bbl per MM of liquefied petroleum gases, which add significantly to the market value of the wellstream. Options for enhancing the flow rates from the well are being considered; and the other exploration and appraisal options in the permit area are also being evaluated for future drilling."

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Pacific Sword Probes Tui Region

The Veritas-owned seismic vessel Pacific Sword is acquiring 350 km of 2D and 3D seismic over the area encompassing the recent Tui oil discovery in the PEP 38460 exploration permit.

A statement by New Zealand Oil and Gas said the primary purpose of the 3D seismic survey was to define the extent of the 'F' Sand oil pool discovered in February.

The 3D survey will also extend over several similar features nearby. "This is expected to generate several targets for a drilling campaign provisionally planned for next summer", the statement said.

The Pacific Sword should complete the programme by the end of April.

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