Great news from Kupe (if drilling permits could be acquired) – NZ has bigger gas and oil reserves than previously reported

In these  days  of  doom  and  gloom  over the  impact of the  Covid-19  pandemic, any outfit  which can trigger  a  ray  of optimism   deserves a  salute  from  the  rest  of the  country.

Fisher & Paykel  Healthcare, for  example,   reported  this  week that in the  four months to  July 31 it recorded a 390% lift  in the  sales of  its hospital  respiratory care  products,    compared with  sales in the same period  the previous  financial  year.  This  remarkable  performance reflects a changing trend in clinical practice to lead with nasal high flow therapy for treatment of Covid-19 patients in hospital. Global  sales   for  the Auckland-based  company of both invasive ventilation and Optiflow consumables in July have returned to similar levels to the peak it saw in April.

No  wonder  this   is   the  top capitalised   company  listed  on   the  NZX, valued at  over  $20bn.

In a  very  different  field,  but  like  the  F&P Healthcare report barely getting a mention  in the mainstream  media,  was   the  announcement   that  reserves  in  the  Kupe  gas and oil field  offshore  in  Taranaki  are  significantly   greater  than previously  reported.  This  means the  field’s  life  is  likely  to be  extended beyond  the 15-20  years  expected  when  it first  came on  stream   in  2009.

This reserve increase not only provides additional volume from within the existing development but also from the planned further development including onshore compression and future well(s).  In the coming financial year the field will have outproduced its originally sanctioned reserves.

Kupe, situated off the south Taranaki coast, is an important part of NZ’s energy infrastructure. It provides  roughly 15% of NZ’s’s annual gas demand, and about 50% of NZ’s anticipated LPG demand until 2025.

In  a  very apposite  comment,   CEO  of  NZ  Oil & Gas  Andrew  Jefferies  says: 

At this time of global turmoil, I’m proud that we remain a part of a key domestic energy asset that continues to outperform, providing significant volumes of gas, LPG and light oil, adding value to our economy, providing high tech and high paid jobs, as well as cooking our sausages”.

NZOG  (which actually  discovered  Kupe  back   in  1986)   has a  4%  stake  in  the  field and earned $15.5m in cash revenue from Kupe in the 2020 financial year.  Its share of production from Kupe  in the year was 32,577 barrels of oil, 0.93 petajoules of gas, and 4,053 tonnes of LPG.

Genesis  Energy this week also welcomed  the increase  in the  reserves  as  indicated  by the  owner/operator, Beach Energy.

Reflecting its 46%  interest, Genesis receives 46% of the natural gas produced. It has long-term contracts with the other joint venture partners to purchase the remainder of the natural gas produced and has rights to all future production of natural gas from the field. 

Genesis also sells natural gas to its retail customers in the North Island, uses it for electricity generation at Huntly Power Station, and sells surplus natural gas on the wholesale natural gas market.

In  its  press  statement,  NZOG  had  another  pertinent comment  from  CEO  Jefferies:

We look forward to the support of our Kupe partners, community and government as we continue to develop the field over the coming decade. Kupe gas production is Transition writ large.”   

The  transition  he is  talking  about  is the  one  to  a  low-carbon-emissions  future.   NZ is  a  light oil province, so anyone  wanting to  reduce emissions   should  prefer to produce  oil here rather   than use  extra  heavy  oil  produced  by  other  countries.

In  a  competitive  world NZ  does not  have  many competitive advantages, as  it is  finding  out once  again  as the Covid-19  pandemic  rages.

One of the  few  advantages it does have is a  massive continental  shelf, the fifth largest in the world, beneath which  lie vast  quantities  of  undiscovered  natural  gas  and probably  light  oil.

Wouldn’t  it   be marvellous, as  NZ  seeks  to re-gather  economic  momentum  in the aftermath  of the Covid-19 pandemic crisis,   if  explorers  succeeded  in discovering   some of  those  vast  reservoirs  of  natural gas?

Oh no:  we  forgot.  The  Ardern   government  has banned  the  issue  of  new  permits  for  oil  and gas  exploration.

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