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Geologists excited about East Coast oil and gas prospects - 15/05/1998

Six potential oil and gas-bearing geological structures, each as big as the large Maui natural gas field in Taranaki, have been discovered off New Zealand's East Coast, geologists say.

A five-year study of seismic data from the East Coast region has highlighted six offshore structures about the same size as the Maui natural gas field, New Zealand's largest single energy resource.

The study also found up to 30 smaller geological structures conducive to oil and gas exploration. The structures occur between East Cape and offshore Marlborough.

Results of the study are published in a report by petroleum geologists Brad Field and Chris Uruski of the Institute of Geological & Nuclear Sciences Limited. The report includes detailed maps showing the location of the structures. '' All the ingredients are there for successful oil and gas exploration,'' said Mr Uruski, adding that new prospects off Hawke's Bay and Wairarapa might simply reflect the more up-to-date seismic data available from those two areas.

Seismic surveys ''shot'' off Hawke's Bay and Wairarapa in 1990 produced much better results than the ''relatively primitive'' equipment used off Gisborne in the 1960s and 1970s.

'' Unfortunately the seismic coverage of the East Coast region is incomplete at the moment. In some places it's good, in others it's not so good and it's non-existent in some places.''

Mr Uruski said the recent land-based gas find 10km north of Wairoa by Enerco and American-based Westech Energy was likely to be the start of exploration companies showing increased interest in the East Coast. He said offshore structures were generally bigger than those on land.

Geologists had always suspected the East Coast had big potential, but it remained unexplored because there is less risk for oil companies to drill in proven regions such as the North Sea and the Middle East.

The East Coast region is about 700km long and about 150km wide, with about half of it offshore. It extends out to ocean depths of 1500m to 2000m.

Mr Uruski said seismic surveys profile down to eight kilometres on average and produce data enabling scientists to pinpoint the exact size and position of anticlines -- the geological structures that potentially hold oil and gas.

He described anticlines as layers of sandstone and mudstone folded together in the sediment. As the hydrocarbons percolated up, they were trapped by the mudstone. The sandstone acted as a reservoir.

A geological fault running through an anticline could mean it was not a successful trap. If there was no fault, the next question for the oil exploration company was whether it was feasible to extract the oil or gas.

Mr Uruski said East Coast oil sediments were marine in origin, similar to the North Sea oilfields. Taranaki oil and gas had a different source -- it came from coal laid down originally on land. Geochemical studies on the East Coast show the oil-bearing rocks have a higher oil to gas ratio than Taranaki source rocks.

Companies exploring offshore would be hoping to find oil rather than gas because oil was worth more. Deep sea drilling technology had progressed rapidly in the past decade and it was now possible to drill at depths up to 2000m, Mr Uruski said. The Maui gas field is expected to decline rapidly from about 2006.


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.