Shell undertakes drilling to extend life of dying Maui field

Jun 20, 2004 02:00 AM

The life of the dying Maui gas field may be extended beyond 2009 -- the original date for the expiry of the huge reserve -- as a result of drilling likely to begin early next year. The drill will probe a rock structure 5 km east of the Maui A platform, thought to contain enough natural gas to supply New Zealand's needs for more than three months.
Similar drills in other parts of the Maui field in offshore Taranaki could deliver a total 200 PJ of gas that would supply the country enough natural gas for one year. That will go part way to alleviating the prospect of a national energy gap towards the end of this decade.

Shell NZ spokesman Anjit Bansal said extracting the remains of gas out of the Maui field was the result of a "breakthrough agreement" between companies mining Maui gas -- Shell, OMV and Todd Energy -- and major users the government, Contact Energy, NGC and Methanex.
"We have known about the likely existence of these last remaining years for many years," Bansal told. But the small pockets had been considered uneconomic to develop because the mining companies were contracted to sell it at a cheap price set in the late '70s. Under the new agreement, Shell, OMV and Todd Energy will be able to sell gas they find in new probes over the next year or two at current market prices.

The prospect of an energy gap following the expiry of Maui was highlighted two years ago when the original expiry date of 2009 for the giant field was brought forward to 2007. That meant the Maui shortfall may impact on the nation's energy supplies before the alternative Pohokura field comes on stream.
"But now we hope to be able to extend the life of Maui back out to 2009, and maybe beyond," said Bansal.

Maui mining companies are spending about $ 1 mm in engineering preliminaries to the first drill of the IHI gas pocket before actual drilling. First discovered by drill nearly 20 years ago, it is believed to contain 55 PJ of gas. Other formerly uneconomic pockets of Maui gas will be probed, and possibly drilled, over the next few years.
Meanwhile, tax breaks and lower royalties announced by the government to encourage more gas exploration in the post-Maui era have not been uniformly welcomed by the smaller exploration companies they are designed to help. The government reduced from 5 % to 1 % the amount it takes in royalty payments for gas discoveries. But it kept royalties on oil discoveries at 5 %, which was criticised by NZ Oil and Gas general manager Gordon Ward. His company is engaged in an intensive hunt for oil west of Maui in a cluster-type oil field development.

Two successful wells had been drilled (Tui and Amokura) and another two were about to be drilled (Pateke and Kiwi).
"But these are oil drills, with gas only a by-product," said Ward. "These new measures will not help us one drop."
While the government was prepared to make a $ 33 mm investment in the America's Cup, it would not do so on an issue as critical as the search for new energy sources, he said.

Petroleum Exploration Association CEO Mike Patrick gave the measures a 6 out of 10.
"They will probably mean explorers get out there and drill more holes, and that marginal finds might have a better chance of commercial success," he said. But he questioned whether they went far enough to make a significant impact on the discovery of new gas reserves.

Source: Fairfax New Zealand
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