By Neil Ritchie
BRISBANE based coal seam gas explorer Comet Ridge has surrendered another onshore West Coast exploration lease, leading to speculation it may quit New Zealand, as its sole remaining asset, a mining lease, has seen little activity for years.
Comet Ridge entered New Zealand late last decade hoping this country’s CSG sector would prove as prolific, or certainly economic on a smaller scale, as Queensland’s CSG industry.
Initial enthusiasm included this country’s first extensive airborne CSG survey and an independent report from Netherland Sewell and Associates International that estimated contingent reserves as 65 petajoules at the 1C level, 127PJ at 2C and 244PJ at 3C.
However, exploration wells in PEP 50280 and PEP 50279, the lease it has just relinquished, as well as several development wells in mining lease PMP 50100 all proved non-commercial.
Meanwhile, listed Canadian junior TAG Oil has plugged and abandoned the Waitangi Valley-1 well, its first deep well in the northern onshore part of the East Coast basin.
Company chief executive Garth Johnson said the well encountered some very high hydrocarbon zone pressures “at shallow depths that cannot easily be compared to anywhere else in the world.
“We understood this program would be challenging and we encountered extremely difficult drilling conditions in the first 856 metres of drilling. After consulting with worldwide drilling experts and considering all data ourselves, we have made a difficult decision to plug and abandon Waitangi Valley-1 before reaching the intended total depth (of 3,600 metres) to maintain the safety and integrity of the operation.”
Fellow Canadian listed junior East West Petroleum Corporation funded the drilling program in lease PEP 38348 in return for access to all data and results from the well that targeted the Waipawa Black Shale and Whangai source rocks.
TAG is now moving the Nova-1 rig back to Taranaki to focus on its core producing assets at Cheal, with three more wells planned for the Cheal E wellsite.
Meanwhile, production from the Cheal E wellsite (within the Cheal North lease PEP 54877) achieved its highest monthly average daily rate during July, with 882 boepd (78% oil) produced from the Cheal-E1, E4 and E5 wells.
The Cheal E wells have produced over 176,000 boe (81% oil) since last November. The Cheal E site has the capacity for 12 wells to be drilled from the one well pad, with Cheal-E6 due to be drilled before the end of 2014.
A third fellow Canadian listed junior, New Zealand Energy Corporation (NZEC), continues with its “marginally good, marginally bad” news.
It recently reported its results for the June 2014 quarter, with significantly improved netbacks of C$65.30 per barrel of oil, compared to C$62.33 during the first 2014 quarter and only C$22.46 during the corresponding 213 period.
Average production during the June 2014 quarter was up marginally, at 228 barrels of oil per day (bopd) but still below NZEC’s immediate amended goal of 300 bopd and far short of a previous 2000 bopd target. Total oil sales recorded were C$2,7 million, including C$313,425 of sales on behalf of private partner L&M Energy.
NZEC also had its first natural gas sales during the latest quarter, producing total sales of C$42,043.
But the company had a total income loss of $C13.6 million for the June quarter, compared with $C8.4 million for the previous three months, while its working capital at the end of August was only C$2.3 million – certainly inadequate for its planned exploration and development activity for the rest of 2014.
NZEC holds a 100% interest in the onshore Taranaki petroleum mining permit, PMP 55491 (the Copper Moki and Waitapu fields) and the larger exploration licence PEP 51150 that surrounds PMP 55491. It also holds a 100% interest in the nearby PEP 51150 (Eltham) licence, a 65% interest in PEP 51151 (Alton) and a 50% stake in PMP 38138 (the Tariki, Waihapa and Ngaere mining lease), both with L&M.
NZEC and L&M are currently required to drill another exploration well, believed to be Horoi-1, in the Alton lease by November but NZEC has asked the government’s New Zealand Petroleum & Minerals for an extension until at least the first quarter of next year.
NZEC is also actively seeking farm-in partners to allow the accelerated exploration of some “additional high-priority drill targets” in the Eltham lease.
But, as with all new exploration expenditure, NZEC warns “the company’s ability to drill new exploration wells is contingent on its financial capacity”.