NZOG ends 2007 exploration programme with Taranui disappointment

NZ Oil and Gas is abandoning its Taranui-1 well in Taranaki after it failed to yield significant amounts of oil, ending the company's exploration programme for the year.

NZOG, a partner in the successful Tui oil field, said it was still looking at samples from the area but it did not appear commercially significant.

NZOG is a 12.5 percent partner in the venture, along with Pan Pacific Petroleum (10 percent), AWE NZ (20 percent), NZ Overseas Petroleum (22.5 percent), and Mitsui E & P Australia (35 percent).

The first of its two offshore Taranaki exploration wells this year, Hector-1, also failed to yield a significant find. It had been estimated at between 60 million and 100 million barrels of recoverable oil.

Taranui-1 had been estimated at 5-15 million barrels of oil.

The company will spend $25 million on exploration in the 2007/08 financial year, NZOG general counsel Helen Mackay said.

"In the year ahead we've still got a pretty extensive programme of exploration, particularly for a company our size and in the New Zealand market. That's a huge investment in finding our next energy sources."

Three exploration wells will be drilled in the Kupe gas/condensate field next year, with more rig slot options in the permit area which have been surveyed and analysed.

NZOG is also looking for partners to drill the northern Taranaki Felix permit next year.

Currently all NZOG's acreage is in Taranaki, with the company declining to bid for permits in Great South Basin in part due to wild weather conditions there.

"That doesn't mean we're not going to keep other opportunities in New Zealand under review, we will continue to see what's out there," Ms Mackay said.

NZOG currently running at better odds than usual, with rule of thumb that only one discovery likely out of every 10 wells drilled, she said.