March 2014 Energy Wrap
By Neil Ritchie
The scheduled arrival in New Zealand waters during late March of the jack-up Ensco Rig 107 will complete the four-strong drilling contingent currently in the country.
The Ensco rig will join the deepwater drillship Noble Bob Douglas, which has virtually finished drilling the Caravel-1 “wildcat” well off Otago, the semi-submersible rig Kan Tan IV, currently drilling the Pateke-4H “infill” well off Taranaki, and the Archer Emerald modular offshore drilling unit that is still on the offshore Taranaki Maui A platform.
The jack-up rig is being loaded onto the heavy lift vessel, the Talisman, in Singapore and, on arrival in New Zealand waters, is due to head to the sheltered Admiralty Bay in the Marlborough Sounds for offloading and then towing by its support vessels to offshore Taranaki.
Once off Taranaki it is due to start an extended development campaign for Maari oil field operator Austrian giant OMV and its partners lasting at least nine months. Afterwards other joint ventures may also utilise the rig for their exploration, and possibly appraisal, wells off Taranaki and perhaps in other geological basins.
The 107 is no stranger to this country, having spent about two years in New Zealand waters for various joint ventures in various basins from early 2008 to late 2010.
While there is no word yet regarding the results of the Archer Emerald programme, or whether Caravel-1 has struck any worthwhile hydrocarbons, Pateke-4H has had oil shows in the Kapuni Formation F sands where an oil-bearing reservoir is likely to have been encountered.
Meanwhile, onshore activity continues in Taranaki and elsewhere – from preliminary land surveying for future seismic surveys to more development drilling.
Todd Energy’s new $42 million Bentec Euro Rig 450t started its first well, Mangahewa-16 at the Mangahewa D wellsite on February 11 and is likely to reach the total deviated target depth, of up to 5500 metres, before the end of the month.
And the Canadian listed juniors TAG Oil, East West Petroleum and New Zealand Energy Corp continue their respective onshore exploration and development programmes around Taranaki, as does UK-listed Kea Petroleum.
TAG and East West should start their first well near Wharehuia, Southern Cross-1, by the end of the March, while TAG alone should start hydraulic fracturing the more southern nearby Cardiff-3 deep gas well, beginning with the perforation of the K3E sands, the deepest of three potential test zones within the Eocene-aged Kapuni Group Formation, before the end of the month.
As well as now producing light, high-quality oil from nine wells in its onshore Taranaki licences, NZEC is also preparing four further wells for future production.
It has completed workover activities on Waitapu-2 and that well should be starting production, with testing of the resultant hydrocarbon flows, from mid-March. Waitapu is NZEC’s second discovery after its initial Copper Moki find in licence PEP 51150 (Eltham).
NZEC and joint venture partner L&M Energy are continuing investigating ways to bring some virtually abandoned wells, plus others, back to full production in the nearby Tariki, Waihapa, Ngaere (TWN) licences.
They have identified cost saving opportunities at the Waihapa-8 well and are installing a dedicated downhole pump for artificial lift, heating gas at the wellhead and using existing gas lift. Increased production from this well is expected from late March. If successful, this should result in savings of approximately NZ$400,000 per annum.
The TWN partners are also evaluating bringing back production from the Tikorangi Formation at the virtually abandoned Waihapa-1B well. An uphole completion in the shallower Mount Messenger Formation is also possible. Artificial lift facilities are also being installed at the Waihapa-2 well, with production from the Mt Messenger Formation anticipated by April.
In addition, the TWN joint venture has entered into an agreement with an un-named gas marketing “counterparty” to transport gas along a section of the TWN gas pipeline for four years, with a five-year right of renewal. This is expected to generate between NZ$0.5-2million of revenue per year.
And two senior NZEC executives – Ian Brown, head of Wellington subsidiary Ian Brown & Associates, and Bruce McIntyre, Canadian company president -- have taken early retirement, though McIntyre will remain on the NZECC board and Brown will act as an advisor.
This cost-cutting exercise is in addition to country manager and industry veteran Chris Bush resigning to be effectively replaced by Petroleum Exploration and Production Association of New Zealand chief executive David Robinson from May.
Finally, Kea Petroleum is making more money, though it still struggles sometimes with Taranaki’s complex geology.
The company saw a huge improvement in revenues for the half-year to November 30, 213, which spiked to £1.2 million (almost NZ$2.4 million) from only £382,000 for the corresponding previous six months. Gross profits climbed to £739,000 from £180,000.
But it says that evaluation of the results of last year’s 3D seismic survey of its Puka discovery, shows both the Puka-1 and 2 wells were drilled on the edge of the channel fairway. Future wells will now aim to drill for better sands in the main channel.
Kea is still interpreting 3D data from the Mercury Prospect in the northern onshore-offshore licence lease PEP 52333 where it still wants to drill later this year, while it wants a work programme extension for its more remote northern onshore-offshore licence PEP 381204 where it drilled the Mauku-1 exploration well.