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Natural gas field worth second look - geologist - 18/03/1998

A potentially large gas field off the North Island's Wairarapa coast may be big enough to warrant serious exploration, a geologist's report says.

Chris Uruski, a petroleum geologist with the Institute of Geological & Nuclear Sciences Limited, has analysed data from the field -- drilled in 1994 -- and has concluded the gas field could be substantial.

A partnership including the American exploration companies Amoco, Mobil and Pecten and the New Zealand company Todd Energy drilled the Titihaoa-1 well 20km northeast of Castlepoint in December 1994.

The well was plugged and after significant volumes of dry gas were noted between 1940m and 2400m. Rock units were considerably thicker than had been expected and the presence of large volumes of dry gas may be an indication of other hydrocarbons trapped at deeper levels.

'' The presence of the gas alone might justify further work. However, flow rates were not established at the time the well was drilled and precise estimates of volumes are unknown,'' Mr Uruski said.

In his report, Mr Uruski estimated that the field could contain up to 1750 billion cubic feet of gas, or more than 70 percent of New Zealand's total natural gas reserves as at the beginning of 1996. The gas-bearing zone of the Titihaoa geological structure covered about 40km2 and was about 500m thick.

'' Titihaoa is definitely worth a second look, especially with a growing market for gas in New Zealand and a looming shortage as the Maui field is expended,'' Mr Uruski said.

Although the Titihaoa gas was almost pure methane, an ideal gas for domestic use, investment in such a gas field would be expensive. To develop such a field would require at least four wells to confirm its extent, and then as many as 10 development wells to effectively drain the field in a controlled way. A pipeline would probably be needed to bring it to shore.

A renewed drilling programme would probably cost $20 million and Mr Uruski said there were promising targets immediately to the north and south of the Titihaoa-1 well.

Prospecting licences for the area are now held by American company Westech in a joint venture with New Zealand gas company Enerco. Westech is currently drilling several exploratory on-shore wells in Hawke's Bay.

Mr Uruski said if results of the drilling were encouraging, it would make further off-shore exploration more appealing to investors. This was borne out when the partnership recently announced that they had discovered gas in their first well.

There are a large number of gas and oil seeps on New Zealand's East Coast. Since the 1890s about 40 wells had been drilled in the region and although none had yet proven commercial, about 70 percent showed signs of oil or gas.

'' It is probably only a matter of time before the East Coast region becomes New Zealand's second oil and gas producing area,'' he said.


BACKGROUND

The Institute of Geological & Nuclear Sciences Limited offers a wide range of research and development services to the petroleum exploration industry. Clients use the Institute's expertise to address specific exploration problems and opportunities.

The Institute's services and capabilities include reservoir geology, basin modelling, geochemistry, seismic mapping, seismic processing, applied paleontology, advanced biostratigraphy, and exploration geophysics.

New Zealand's sedimentary basins are geologically highly complex because of continuous tectonism over tens of millions of years associated with an evolving plate boundary.

New Zealand offers exploration companies a variety of risk options from a producing basin (Taranaki) through to true frontier regions (offshore Northland). There is less risk involved in finding ways of squeezing the best out of a known field than moving to a frontier area in the hope of striking new reserves, although potential returns are greater in an unexplored basin.

New Zealand has to compete internationally for exploration dollars and recent government policy revisions have increased prospecting activity and boosted the chances of New Zealand finding new reserves of oil and gas. It costs $2 to $4 million to drill a well on-shore, an perhaps five times that for an offshore well. In addition, exploration companies can spend $2 to $10 million onseismic surveys.

Successful exploration depends on having rock containing a few percent organic matter (a source rock) being buried deeply enough so that it becomes hot enough to convert the organic matter into oil or gas. This must occur to the extent that it can overflow the pore spaces in the source rock and migrate to a porous reservoir rock (eg, sandstone) , and capped by a seal rock (eg, mudstone).

Whether the reservoir is a commercial proposition depends on many factors including the volume trapped, how easily it can flow out of the reservoir rock, how isolated the find is from a refinery and other infrastructure, the company's priorities and budget, the government's exploration regime, and the political stability of the country. There are eight sedimentary basins in NewZealand and about $300 million is committed to exploration in and around New Zealand over the next 12 months.