Discovered more than 100 years ago, the Taranaki Basin holds recoverable gas reserves estimated at 5.5 trillion cubic feet (Tcf) through many different types of reservoirs ranging from large, deep gas targets to small, low-risk, shallow gas reserves. Currently, all of New Zealand’s gas is sourced from the Taranaki region.
The Taranaki Basin not only reflects the history of New Zealand’s gas production, but also holds considerable promise to continue supplying the country’s gas needs. Analysts have suggested that the basin is likely to house many significant sized resources and it is considered under-explored in comparative terms.
The Kapuni onshore field, operated by Shell Todd Oil Services (STOS), is the country’s oldest producing gas-condensate field. Located in Taranaki, about 85 km southeast of New Plymouth, the field contributes some 17.3 per cent towards the country’s gas production.
Though discovered in 1959, gas from the Kapuni field had a carbon dioxide concentration of approximately 40 per cent, and therefore required special processing. As there was inadequate natural gas infrastructure at the time, it was not until 1967 that a gas market was established and the field was brought onstream in 1970.
The Kapuni field has produced some 1,101 billion cubic feet (Bcf) of gas to date. Production plateaued in 2001 at approximately 1.05 billion cubic centimetres per annum (Bcm/a). Sixteen Kapuni field wells are distributed around the surrounding farmland on nine well sites. Gas, condensate and water production are fed by underground pipelines from these well sites to the Kapuni Production Station for processing.
Of the 15 fields in the Taranaki basin, the Maui field has historically dominated New Zealand’s gas production, recently producing approximately 57 per cent of New Zealand’s total gas production. Located 35 km off the Taranaki coastline, the Maui field comprises two production platforms. The field was discovered in 1969, however full production from Maui began a decade later, with 14 wells drilled from the platform in a water depth of 110m – considered a deep water platform at the time.
Over its life, the STOS-operated field has produced some 3,008 Bcf of gas and 19.8 million barrels (MMbbl) of LPG. Meanwhile, production from the field has been declining rapidly indicating the economic life of the field is much shorter than previously assumed – production declined from almost 5 Bcm in 2001 to 2.25 Bcm in 2006. However, last May, the Maui development proved up a further 60.8 petajoules (PJ) of gas. The update followed another 200 PJ increase in August 2006, which is equivalent to around two years’ national demand.
The decline of the Maui field has prompted a flurry of exploration, but few successful discoveries. One exception to this is the Pohokura Basin, which is located in the Taranaki Basin. The basin is New Zealand’s largest undeveloped gas field and at current rates, the field rates as the third largest gas producing field in the country, producing approximately 8.6 per cent of the country’s gas production and has estimated recoverable reserves of about 700 Bcf.
The Pohokura-1 exploration well was drilled in February and March 2000. A gas/condensate accumulation was discovered in the Kapuni Group. The well encountered a 130 metre gross hydrocarbon column and tested at stabilised rates of up to 17 MMcf/d and an average condensate of 68 bbl/MMcf of gas with an average carbon dioxide content of 8 per cent.
Development of the field has involved the drilling of three wells from a land-based site at Motunui and six from an offshore platform located eight km off the coast. The Pohokura partners, which include Shell, Todd and OMV, have also recently been permitted to continue to explore the Okoki structure, located a few kilometres west of the Pohokura wells.
Future Prospects: To Kupe and Beyond
Producing only 0.15 per cent of the world’s gas supply, New Zealand is considered a “˜small fry’ in the gas industry, despite having identified basins with strong potential. New Zealand Oil and Gas (NZOG) Chief Executive Officer David Salisbury believes this is because the geographical isolation of the country and limited infrastructure for the oil and gas industry meant that “˜big industry players’ tend to overlook New Zealand.
Mr Salisbury also believes that New Zealand has excellent prospects for further exploration in a safe and secure location and that further resources potential exists in the Taranaki basin as well as bigger potential in frontier basins such as the Kupe gas development and Pike River.
The Kupe gas field is one of New Zealand’s largest undeveloped gas fields and is located 30 km off the New Zealand coast, south of Taranaki Basin. The field, which is being developed by a joint venture between Origin Energy, NZOG and Genesis Power, contains proved and probable (2P) reserves of over 230 PJ of sales gas plus considerable condensate and LPG, with additional reserves potential.
The development involves an unmanned offshore platform constructed above the Kupe Field production wells and a 30 km, 12-inch subsea pipeline that will deliver the raw natural gas, LPG and condensate to shore. The development drilling phase of the project was completed in late April. Construction is currently underway at the project after the green light was given by the joint venture companies in mid-2006 and is expected to be completed by mid-2009.
Over the last two years, a number of major changes have affected New Zealand’s gas market, which have impacted and are likely to continue to assert an impact on gas exploration and production in the Taranaki Basin. While exploration activity has increased over the last decade, the focus has generally been on small onshore prospects. Consequently, the wholesale gas market in New Zealand has moved from a stable supply of gas from the Maui and Kapuni fields under long-term contracts to supply from many more fields, under short-term contractual arrangements, involving much smaller parcels of gas.
The change in the market has made impeded substantial offshore exploratory activity, where larger prospects are likely to exist because prior exploration activity has been limited. However, in order to stimulate more exploration, the New Zealand Government has reduced gas royalties from 5 to 1 per cent. This is likely to spur the re-examination of a number of offshore prospective basins by major gas explorers for the first time in over 20 years.
The final major development in the Taranaki Basin concerns the entry of new participants in the region’s upstream sector, notably including Australian company Origin and American company Pogo, which have both the capital and technical experience to venture further afield.
“A shift in technology and in the global market for energy means that New Zealand appears to have the potential for global scale oil and gas discoveries with associated export earnings,”? said Crown Minerals Group Manager Chris Kilby.
In 2007, these trends have culminated in gas production increasing by almost 20 per cent to 160 PJ/a. This is expected to continue with the Pohokura field ramping up production and the development of the Kupe basin. Despite having a long history, the Taranaki Basin continues to have a bright future with sustained exploration in offshore prospects, and development of frontier basins.