New Zealand Oil & Gas Ltd’s (NZX: NZO) deepwater exploration target Barque off the coast of Oamaru has arguably just become one of the most promising offshore targets in the country.
However, any chance it could move toward a $US50 million ($NZ68 M) drilling programme has been hampered by the Government's decision to ban any more new offshore exploration permits.
Local environmentalists welcomed the decision, but maintained it had not gone far enough.
NZ Oil & Gas (NZOG) chief executive Andrew Jefferies said the decision had created a “headwind” for Barque's further exploration. The Government's decision would be a deterrent to overseas joint venture partners financing a drill programme; which Jefferies estimated at around $US50 M.
“There was talk on the possibility in taking a pause, we didn't see a ban coming,” he said.
While the industry could have managed a moratorium, the outright future ban on offshore exploration was unexpected and disappointing, Jefferies said.
“It's going to be harder to attract offshore funding when there's a `Not open for business' sign out there,” he said.
Oil Free Otago spokesperson Rosemary Penwarden said: “We don't want to stop the economy but move to a liveable future.
She acknowledged two companies still had southern drilling rights, through existing permits, but the group “would continue fighting if we have to.”
NZOG’s Jefferies major concern was the potential loss of thousands of jobs for young people in the decades ahead, and also the security of New Zealand's long term gas supplies.
Jefferies said if the country's gas supply was stopped today and imports began, the price would immediately double for users.
Progas Dunedin has been lobbying for Dunedin to be an industry support base if gas was found; but its former spokesman and Dunedin City Council councillor Andrew Whiley said the group was at present “dormant.”
Whiley said the Government's decision was “really disappointing,” highlighting that gas use globally was the preferred transition energy source.
“Off our coast it's all been about gas (discoveries),” he said.
While there are currently 22 offshore permits still live around NZ, some of the most recent activity has been shipborne hydrographic surveying and test drilling near Barque, albeit with no commercially viable finds of oil and gas.
Jefferies said while no more seaborne hydrographic work was planned for Barque, NZOG would be spending about $1 million in reprocessing its hydrographic data.
“We will be going to conferences in Australia and London seeking joint venture partners (for Barque),” Jefferies said.
He maintains NZOG was still in talks with interested parties to progress a Barque drilling programme. NZOG recently received an extension to its Barque exploration permit and must make a drilling programme decision, or relinquish the permit, by April 2019.
Jefferies was asked if the decision increased the pressure on NZOG to make a decision on Barque.
“It doesn't put the clampers on the project, but it's given us a headwind,” he said.
NZOG also has the Toroa permit well south of Dunedin, of which NZOG is in the process of taking a 100% share.
Toroa's location in the wilds of the southern ocean would appear to make it one of the most difficult target in the country.
Mr Jefferies said Toroa and Barque could potentially be explored at the same time, also noting that Beach Energy had taken over departed Anadarko's Caravel permit, which was also off the coast from Oamaru.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.