By Neil Ritchie

SHELL Todd Oil Services’ (STOS) announcement of a discovery at a well in the offshore Taranaki field has shone a light of hope for New Zealand oil sector workers amid what has been a trying time.

The Ruru 3 discovery, on STOS’s Maui petroleum mining permit (PMP 381012), was enough for STOS to apply to the government’s New Zealand Petroleum & Minerals unit to extend the Maui permit for another 21 years from June, 2015.

STOS has not given any details about what hydrocarbons have been encountered or in which geological formations they had been found, nor did it describe the size of any potential reserve and what tests had been completed.

However, industry commentators are excited by the brief statement and indications from STOS that the find could prove commercial.

“STOS is usually pretty cautious so for them to make such a statement there must be something significant there,” one commentator told Oil & Gas Australia, “it all seems pretty exciting.”

“While it may prove sub commercial, Ruru is now a proven play, which opens up more opportunities for further exploration drilling within that part of the Maui licence and perhaps also to the immediate north and the south if the play fairway extends that far,” said another.

There are unconfirmed reports that gas was encountered in the main target zones, the Eocene-aged Kapuni Formation C and D sands, but that there were also oil shows in the higher Miocene-aged Moki Formation.

“This discovery is pleasing for New Zealand but needs to be tempered by the uncertainty of not knowing if the ‘find’ is commercially viable,” STOS general manager and Shell New Zealand chairman Rob Jager said during mid-January.

He also said all data obtained from the extensive multi-well Ruru campaign would be analysed and any development options investigated, which depended partly on world oil prices but also on the New Zealand domestic gas market that is currently essentially fully supplied.

“The challenge for the Maui joint venture is to determine if this discovery can be economically developed,” Jager added.

The Ruru campaign started in 2001 but the initial well, Ruru-1, was abandoned after a severe April storm. Then the semi-submersible Kan Tan IV rig started the Ruru-2 well last September, though that was later sidetracked and then abandoned because of drilling difficulties. Afterwards the rig moved to drill Ruru-3.

Because of the operational difficulties encountered with Ruru-2 and the associated cost overruns, the Maui partners Shell Exploration NZ, Todd Energy and Austrian giant OMV decided against drilling the Maui-8 well, which had been planned to test the remaining oil and gas potential of the Kapuni C, D and F sands in the central part of the field.

It is believed the partners have also decided against proceeding with plans for a possible second four-dimensional seismic survey over parts of the field. The Kan Tan IV has been demobilised, towed to off New Plymouth and, in early February, was awaiting the arrival of the heavy-lift vessel Mighty Servant I to take it back overseas.

After completing their post-campaign assessments, the partners could decide further appraisal of the Ruru Prospect is warranted, extending yet again the economic life of the middle-aged field that has produced mainly gas but also some oil during the past 35 years.

And if any oil reserves prove large enough to be developed then, once world oil prices rebound, a pipeline from Ruru to the nearby Maui B platform would enable processing, storage and off loading of oil for export – as happened during the mid-1990s to 2006 when the FPSO Whakaaropai produced about 35 million barrels of crude from the F sands.

If gas reserves at Ruru prove economic – at least several hundred billion cubic feet — then this could also be tied into the B platform and help Methanex New Zealand make up its mind about the economics of constructing a third methanol production train at its Motunui complex north of New Plymouth.

Commentators also say there will be no hurry with any development decisions from any of the Maui partners, given their extensive expertise with other marginal Kiwi “discoveries”, including the offshore Maari oil find that essentially lay dormant for over a decade after Diamond Offshore’s Ocean Bounty rig drilled the first well in 1983. Current operator OMV took over in 2002, drilling appraisal wells and then developing what is now New Zealand’s largest oil field.

And at the now Maari-Manaia oil field, the jack-up Ensco Rig 107 is continuing its 205 million euro development drilling campaign for operator OMV, Todd and listed Aussie juniors Horizon Oil and Cue Energy Resources.

As well, Tui oil field partner New Zealand Oil & Gas has purchased 19.99 percent of Cue from Todd in a move likely to bolster NZOG’s overall oil production and complement the almost static production from the Tui, Amokura and Pateke oil pools.

Some financial analysts have suggested NZOG should now complete a takeover of Cue but energy commentators say the aim is not to “concentrate possible risk” by acquiring all of Cue but “to diversify production risk by acquiring a stake in another producing asset”.

As well, NZOG and minority Tui partner Pan Pacific Petroleum have completed a review of the reserves increase attributable to the Pateke-4H well, which is due to come into production by mid-2015. The companies have actually decreased slightly the likely recoverable reserves from the initial 2.5 million barrels of oil (announced by field operator AWE last year) to only 1.9 million barrels from Pateke-4H plus an additional 0.5 million barrels from other Tui area accumulations.

Meanwhile, several joint ventures already committed to shooting some offshore seismic this summer are proceeding with their surveys.

Seabird Exploration’s Aquila Explorer ship is continuing its extensive — at least 16,000 kilometres of 2D seismic data – program over the frontier Reinga Basin to the northwest of New Zealand for Norway’s TGS-Nopec.

TGS-Nopec is conducting a multi-client “spec survey”, including shooting some data for Norwegian giant Statoil over its exploration licence PEP 55781 and the small extension it was recently granted PEP 57057.

Dolphin Geophysical’s Polar Duke vessel recently arrived and is shooting about 900 square kilometres of 3D seismic in each of the Woodside Petroleum-NZOG leases PEP 55793 (Vulcan) off Taranaki and PEP 55794 (Toroa) of f Canterbury.

The Polarcus Naila also recently arrived to shoot about 3500 square kilometres of 3D data in lease PEP 38264 for American major Anadarko Petroleum and Origin Energy. However, the survey, known as ACB15, is not over the twin Middle East-sized Carrack-Caravel Prospect drilled last summer by the Noble Bob Douglas drillship but over two separate prospects — Wherry and Gondola.

It is known that Origin Energy, when operator of the lease, shot some 2D seismic over much of the licence, including Wherry and Gondola. Now industry commentators say it’s encouraging that Anadarko and Origin still believe in the potential of the offshore Canterbury permit.

“The primary risk with Caravel-1 was the lack of a reservoir but there was plenty of reservoir and plenty of gas charge, just the lack of sufficient seal,” one commentator said.

“Wherry and Gondola are big, robust structures further offshore. So, hopefully, in deeper water the seal will be thick enough. It’s a good sign that the partners are sufficiently encouraged to shoot more 3D across other prospective trends,” he added.

STOS has also recently accessed previously bypassed gas pockets utilising the Archer Emerald drilling unit from the Maui A platform.