NZ oil minister expects activity to pick up. Offers large offshore area for exploration

New Zealand has offered 481.737 square kilometers of offshore and onshore acreage for oil and gas exploration. The oil companies interested to obtain the exploration permits have until September 6, 2017 to submit their bids.

The offered area includes five offshore release areas (in Northland – Reinga, Pegasus – East Coast, Hawke Bay, Taranaki and Great South – Canterbury), and two onshore release areas (in Taranaki and Southland). There is also one offshore/onshore release area in Taranaki.

“New Zealand is well-placed to take advantage of the economic benefits of oil and gas exploration,” Energy and Resources Minister Judith Collins announced today at the launch of the 2017 Block Offer petroleum tender.

“The global exploration and production industry is cyclical – the low number of permits granted in last year’s Block Offer reflects a significant downturn in the sector,” Collins says.

“However, activity in New Zealand and globally is expected to pick up as operator margins improve. The Government will continue to ensure we reap the benefits of petroleum and mineral exploration while adhering to strong environmental and health and safety provisions.”

The total acreage included in the tender is 481,735 km², comprising 5,102 km² onshore and 476,632 km² offshore.

“New Zealand’s petroleum sector is small by global standards but is nonetheless a significant contributor to the economy. Between 2011 and 2015, oil companies invested $7.7 billion in oil and gas exploration and production in New Zealand. Other parts of the economy also benefit from the sector’s demand for goods and services.

“In order to encourage exploration activity, we need to maintain our reputation as open for investment and a good place to do business. At the same time, the Government’s regulatory framework will ensure New Zealand’s unique environment continues to be protected and its high standards of workplace health and safety are maintained,” Collins said.

Permits are expected to be granted in in December 2017.

Environmental issues

New Zealand Petroleum & Minerals agency, responsible for the management of the country’s petroleum portfolio, said extensive consultations had been conducted with 146 iwi and hapū groups and 43 local councils on the proposal for Block Offer 2017 prior to the launch of the tender.

Following the consultations, and in response to submissions received from local authorities, iwi and hapu, the energy minister decided to exclude blocks within 12 nautical miles in the Canterbury-Great South release area; within three nautical miles in Hawkes Bay up to the southern point of Gisborne, in the Pegasus-East Coast 2 release area; within six nautical miles in the Gisborne region in the Pegasus-East Coast 1 release area; and that cover the Takitimu mountain range in the Southland release area.

“Bids for exploration permits must show an understanding of the geology of the area and the resource potential they seek to investigate, and include a work programme which lays out the exploration activities they propose to undertake. Bidders must demonstrate they have the technical, financial, health and safety, and environmental capability to deliver their proposed work programme,” the agency said.

While the ministry has excluded some blocks, the environmentalists have claimed the new block offer will endanger sea life.

“The Government’s decision to allow oil drilling in 35.5 percent of the North Island Maui’s dolphin sanctuary, as well as along the shores of picturesque Lake Te Anau and close to Fiordland National Park, creates major risks for New Zealand’s clean and green tourism brand,” the Green Party said on Wednesday.

“There are only 63 Maui’s Dolphins alive and drilling for oil and gas in the area that’s supposed to be their sanctuary puts every one of them at risk,” said Green Party energy and resources spokesperson Gareth Hughes.

“This is the largest amount of the Maui’s dolphin sanctuary ever opened up for oil and gas exploration, ironically at a time when oil companies are giving up on exploring in New Zealand.”

He was referring to decisions by Norway’s Statoil and the U.S. oil firm Anadarko to relinquish their stakes in New Zealand’s offshore permits late in 2016.

Worth noting, while the environmental groups claimed the companies have been withdrawing from New Zealand amid local opposition, Statoil said the reason was purely commercial.

Commenting in October 2016, Statoil New Zealand Country Manager Brynjulv Kløve said: “After studying 2D seismic data of the search area for the past three years, we think the chance of making a large oil or gas discovery is small, so we have decided to conclude our exploration work in Northland and return those exploration permits to the Crown.”

“Some may speculate we are surrendering the permits for various reasons, but the only reason is that we see the probability too low to justify continuing our search.”

Offshore Energy Today Staff