Significant oil find at Ngaere
Canadian company Tag Oil announced a significant oil discovery in central Taranaki. So much oil is now flowing from the company's Cheal-B5 discovery well at Ngaere that the drilling project's $ 2 mm capital cost will be paid off in just 14 days.
The well is naturally flowing at an average daily rate of 1870 barrels of oil equivalent, 1700 barrels of oil and 1 mm cf of gas.
While this discovery is nowhere near as big as some of Taranaki's offshore discoveries such as Tui, which at its peak flowed 50,000 bpd from much deeper geological formations, the Cheal success is still very lucrative because it is an onshore well located close to existing production facilities.
"Up until now our best well has produced 220 barrels of oil a day, but this one is flowing the 1700 barrels," Tag chief operating officer Drew Cadenhead said.
"It's very big for us. The Cheal crude is a high-quality oil that is commanding a premium price on the international market, it's netting $ 100 (NZ$ 128.78) a barrel. So that's $ 170,000 a day from this one well."
The discovery also promises a happy end to a difficult year which has seen Tag Oil the subject of controversy over the alleged environmental effects of the drilling at Ngaere.
This forced the company to delay its drilling programme while it waited for the Stratford District Council resource consents, which in turn meant 42 drilling rig employees had faced a Christmas without pay.
But late last month an independent commissioner granted the consents, and the deadline for appeals against these consents is December 15.
"If there are no appeals by that date, we'll be spudding our next well the very next day," Mr Cadenhead said.
"We're very excited with this discovery and want to carry on."
While a number of wells have already been drilled in the Cheal field, Tag is describing Cheal-B5 as a discovery well because it has drilled into an entirely new pool of crude in the 1800-metre-deep Mt Messenger geological formation.
"One of the features of Cheal is that it comprises a number of disconnected blobs or pools of oil. It looks like this latest one is a big one," Mr Cadenhead said.
The plan now is for the next two wells to target a shallower 1400 m deep Urenui formation as previously planned and then to again target the Mt Messenger formation, he said.
In a release from Canada, Tag Oil said Cheal-B5 was the third in a 10-well drilling campaign, and was drilled, tested and placed on fulltime production in less than 30 days.
The crude is flowing to Tag's nearby Cheal production station for processing.
"Given the success of our drilling campaigns and the excellent result from Cheal-B5, results indicate substantially more upside potential in the Cheal field than originally anticipated," chief executive Garth Johnson said.
"This result has exceeded our expectations."Once the 10-well campaign is complete, Tag plans a new drilling campaign following approvals for another 18 wells in the Cheal oil and gas field.