By Neil Ritchie

Canadian listed junior TAG Oil has confirmed its first offshore Taranaki exploration adventure – participating in the shallow water Kaheru-1 wildcat well, set to be drilled during the first half of 2015 by the jack-up Ensco Rig 107.

“With the continued success of our shallow onshore Taranaki programs, principally Cheal and Sidewinder, we now have the money to pay our portion of this strategic well,” TAG chief operating officer Drew Cadenhead told Oil & Gas Australia recently.

The Cheal and Sidewinder wells are currently producing cash flow of about C$40 million per annum to TAG, with TAG’s total daily production being about 2,000 barrels of oil equivalent (boe), with 1,800 boe net to TAG and 75% of that being oil.

Kaheru “fits quite nicely” with TAG’s plans to become a more diversified energy player, with production from both onshore and offshore, and any commercial success at Kaheru would be “very significant”, Mr Cadenhead said.

Kaheru sits on a proven thrust belt play fairway that extends from north of Taranaki to south of the region and is adjacent to Origin Energy’s Rimu-Kauri and shallow Manutahi fields. It is the primary structure in exploration licence PEP 52181 and oil or gas-condensate may be trapped at several reservoir levels.

Sproule International estimates Kaheru has potential cumulative undiscovered petroleum initially-in-place, net to TAG, of over 17.4 million barrels of oil on a mid-range basis.

New Zealand Oil & Gas operates PEP 52181 with a 35 per cent stake, TAG holds 40% and Australian listed junior Beach Petroleum 25%.

Planning and preparations are now underway to test a large well-defined Miocene-aged four-way dip closure within the Kaheru prospect by drilling Kaheru-1 to a total depth of 4400 metres below the ocean floor.

“In our assessment, Kaheru is situated on a discovery trend that is referred to as the ‘last pearl’ in a string of discoveries… it remains one of the most exciting prospects near to existing infrastructure in the Taranaki basin.”

Cadenhead further says TAG is continuing to explore other basins, namely the onshore part of the East Coast basin and the onshore part of the Canterbury basin.

TAG plans to spend about C$20 million on its East Coast program during the March 2014-2015 financial year, which represents about a third of the Canadian company’s total capital expenditure to March 2015.

The first well will be Waitangi Valley-1 north of Gisborne in licence PEP 38348, which will be drilled to 3,600 metres, targeting the naturally fractured Waipawa Black Shale and Whangai source rock formations.

TAG chief executive Garth Johnson has described this as a “fantastic well”, close to the Waitangi oil ponds and the original shallow Waitangi-1 well drilled in the early 1900s that still produces oil and gas.

The oil from Waitangi-1 has been scientifically confirmed as being generated in the underlying source rocks of the East Coast basin, proving the oil kitchen is working.

As well as the unconventional source rocks, Waitangi Valley-1 will also intersect a number of shallower Miocene-aged sands very similar to those TAG produces from in Taranaki on the way down to total depth.

After the Waitangi Valley drilling operations TAG plans to drill the Boar Hill-1 well south of the central Hawkes Bay town of Waipukurau in licence PEP38349.

Then, if warranted, TAG plans to test Waitangi Valley-1, Boar Hill-1 plus Ngapaeruru-1 drilled further south in PEP 38349 last year on a back-to-back basis.

Mr Cadenhead said the company was always looking to expand.

“That’s why we are looking at a third basin, Canterbury,” he said.

“We have already shot seismic and are committed to drilling a relatively shallow well late this year.”

“We will be targeting onshore oil as we already know there are oil seeps around this area,” he said.

“This will be TAG’s first Canterbury well and will be located between the coastal cities of Oamaru and Timaru. We know the kitchen is working and we plan to drill up dip of Anadarko’s Caravel-1 wildcat drilled offshore earlier this year.”

The as-yet-unnamed well will be drilled in onshore-offshore PEP 52589 licence.