The Mangahewa-3 appraisal well onshore in the Taranaki area of New Zealand’s North Island represents a substantial discovery for Todd Energy, and it could provide incentive for international companies to participate in the nation’s latest licensing round.

“We see a big upside. A lot more gas” was discovered by the well northeast of the 8,261-ft

The nine properties offered in the New Zealand round all are adjacent to producing tracts. (Map courtesy of Crown Minerals)
(2,518-m) Mount Taranaki, according to Richard Tweedie, managing director of the company.
The license blocks represent the largest onshore acreage package offered in two decades with potential for shallow oil and deeper gas.

The basin has a thick Cretaceous-Tertiary sequence. Current plays include Miocene submarine fan systems, Eocene fluvial-deltaic graben fill and Miocene-Pliocene buried volcanic structures. Drilling to date has focused on four-way dip structures, but the geology is complex and the structures vary, according to Crown Minerals.

The latest bid round, which closes May 30, serves up nine onshore blocks covering 1,264 sq miles (3,273 sq km). All nine blocks lie adjacent to producing fields, and seven fields adjacent to the blocks contained a 50% probability of holding 183 million bbl of oil and condensate and 2.16 Tcf of gas.

Under Crown Mineral rules, applicants must put up US $4,736 with their applications, but technical data packages are available free to interested parties. If a discovery is made, a development, or mining, permit costs another $19,720. Costs also include $1.21/sq mile ($3.16/sq km) for a prospecting permit, $3.19/sq mile ($8.28/sq km) for an exploration permit and $30.45/sq mile ($78.88/sq km) for a mining permit.

Royalty rates are either 5% of net revenues from the sale of the hydrocarbons or 20% of accounting profit from the sale of hydrocarbons each year, whichever is greater, normally.
With the decline of giant Maui gas field, however, the nation needs natural gas, and the royalty rate for gas discovered by Dec. 31, 2009, is 1% of net revenues on sales or 15% of the first $197 million in cumulative gross accounting profits from onshore production.
Companies may deduct production costs, capital costs, indirect costs, abandonment costs, and operating and capital overhead. Operating and capital costs carried forward and abandonment costs carried back also are deductible.

Crown Minerals will make awards based on a company’s staged work program bids. Minimum work requirements include a commitment, within 20 months of receiving an award, to drill at least one exploratory well with the objective and depth defined. That well must be drilled within 32 months.

Within 38 months, the company must commit to a second exploratory well, and that well must be completed within 48 months. In place of the second well, the company can substitute an exploration program with the equivalent technical or financial value as the well.
The initial application also requires the operator to make a financial commitment for the work program.

Crown Minerals has the right to make subjective judgments on the applications. For example, it could rank a work program that proposes two rounds of 3-D seismic acquisition and one exploratory well higher than a similar application that proposes only one round of 3-D seismic and three exploratory wells, assuming the state agency believes the first alternative
is a sounder exploration strategy.

Comments