Promising gas find is reported without much hoopla – Taranaki will welcome the boost but the Greens are coy

In  another  era,  it  would have  been the  lead story  on  every  news channel.  But in a  country  brainwashed  into believing  it’s  apocalypse now,  either  from  global warming or  Covid-19  (and possibly  both),   news  of   a  “significant”   oil and gas  discovery offshore  in Taranaki  barely  registered   in the   mainstream  media,  although the   New Zealand  Herald    did   record  it   in the  business  pages.

There  has not  been a  major energy   find  in NZ  since  2006, and given  New Zealand has  only 11  years  of  gas  reserves left,  the discovery could be an exciting  outcome     at a  crucial   phase for the  NZ  economy.

Austrian giant  OMV reported  the Toutouwai-1 wildcat, drilled to a total depth of 4,317m some 50 km off the Taranaki coast in 130m of water, encountered several hydrocarbon-charged reservoir zones during drilling.

OMV’s Gabriel Selischi, who   heads  the  company’s  Australasian business  from  Wellington, said it was still very early in the exploration process but the discovery had the potential to be a “significant result” for the company in NZ.

“If future appraisal activities confirm the initial drilling results, this could prove to be an exciting outcome for our country’s future energy supply.”

OMV, as the operator of the Petroleum Exploration Permit (PEP) 60093, started drilling at the Toutouwai-1 well in early March 2020.

With the well  now being plugged and abandoned, the COSL Prospector semi-submersible drilling rig  is  to depart Taranaki waters.  Under normal  circumstances it  would have done further testing  but the process  had to be halted because of the Covid-19  lockdown.

The oil company said that the target reservoir was successfully reached  early this month.

“Preliminary results are encouraging with several hydrocarbons charged layers encountered in the Cretaceous sandstones. Given the operational risks posed to the offshore exploration drilling program from the Covid-19 virus at this time, the testing phase had to be curtailed”.

The Toutouwai-1 exploration well is the third and final well in OMV NZ’s 2019/2020 exploration drilling campaign.  The  company is now working with the Toutouwai JV partners, Mitsui E&P Australia and SapuraOMV, on what additional work is required to determine commercial viability.

News of the discovery came just days after Greenpeace “claimed a win of generational significance” and “an end to offshore exploration in NZ”, citing OMV’s decision to postpone exploration plans in the Taranaki Basin.

Greenpeace’s climate and energy campaigner, Amanda Larsson, said the exit of OMV and the COSL Prospector drilling rig

” … means the future of offshore oil and gas exploration in NZ is likely to have come to an end altogether.”

Ministers   in the  coalition   who  might ordinarily    have  welcomed  news  of  an  oil/gas discovery  have  preserved  what for them  is a discreet  silence.

After   all,  the decision  by the Ardern  government  in 2018 to ban  the issue of  any  fresh offshore  exploration permits   was  described   as  its  “nuclear-free moment”.

But  gas production is  still  a  vital  element in  NZ’s  energy industry.

There  was relief  in the industry  when the  Pohokura  field   which  supplies   40% of  the country’s  gas  supply came back on stream  earlier  this month  after being  shutdown for several  weeks.  The company  reported over 200 personnel  worked on-site at the Pohokura production station and the offshore Pohokura pipeline at key periods including OMV contractors, Fugro and Atlas personnel, and the crew of the Normand Baltic.

A spokesman said   NZ now more than ever needs the reliable and affordable energy provided by natural gas.

“It enables cooking, heating and hot water for homes and hospitals, and is a crucial electricity source.It will also play a major role in NZ’s economic recovery by providing energy to vital export industries like food production.Thanks to this work we can be confident of continuous gas supply through the winter.“

The  Labour-led coalition  also quietly  declared   the  Methanex  plant   at  Motunui,  which uses  natural  gas  to   manufacture  methanol, an  “essential industry”   during the Covid-19 outbreak.  Its exports  to China   have been  worth  $600m  a year.

So  it  will be  interesting to  observe   whether  the government  will  support  any early development  as a  result of  OMV’s  discovery  at  Toutouwai.   It  would,  of  course,   arouse  outrage  among those  who – like Greenpeace – demand the immediate  closure of   fossil  fuel production.

The Petroleum Exploration and Production Association of NZ (PEPANZ) on Tuesday said the drilling result   at   Toutouwai was “very exciting and promising news,”   at a time when NZ’s economy really needs it.

CEO John Carnegie   noted there  is still plenty of work to be done before any development is confirmed, but the potential benefits to Taranaki and all NZ are substantial.

He  pointed   out 42% of the profits from any new  field goes to the taxpayer in royalties and taxes, and any development would likely mean new jobs and export earnings. It could also help NZ’s long-term energy security given there is less than 11 years of natural gas reserves left.

“We need affordable and reliable energy to rebuild our economy and power our export industries.

“We haven’t had a commercial discovery since 2006.

“If we don’t develop our own energy then we are at the mercy of overseas producers, and could end up importing LNG.

“We think it’s much better to produce our own energy here in NZ instead. The energy provided by natural gas and oil still has a very important role to play as we transition to a lower emissions world”..

Interestingly,  the  Toutouwai  well,  50km  off  the  Taranaki coast, is on trend with  the  Tui  field  to the  north  and  the  Maui  field  to  the south.

Due to Covid-19 and the current alert level four lockdown further testing at the site had  to be curtailed for now.  This also meant OMV’s  $500m  2020 drilling campaign  in its  NZ  permits had come to an end and no further wells   are   to be drilled.

National’s  Energy  spokesman Jonathan Young says   the  discovery couldn’t have come at a better time when Taranaki needs a boost.

“We are already in a state of constrained supply of natural gas, and as NZ goes into years of economic recovery, the last thing we need is energy shortages and price rises.

Natural gas will still remain an important part of NZ’s energy mix for decades to come, as the country slowly transitions to a low carbon future.”

 We’ve heard no word  from the  Green  Party on  what it thinks of the  discovery.  Those  within  its ranks who are sniffing the  political  winds  might be  fearful  for the  party’s  future  if it  damns  something that could restore  prosperity to  the virus-ravaged economies of Taranaki and  the nation.