A New Zealand joint venture consisting of New Zealand Oil & Gas (NZOG), Tag Oil, and Beach Energy will relinquish the Kaheru permit offshore New Zealand due to the current economic conditions, according to partner Tag Oil.
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Map of Kaheru, from Tag Oil. |
Operator NZOG has submitted an application to abandon the Kaheru permit, due to economic conditions in the current global energy market that could not support drilling the prospect before the commitment date of May 2016.
“The decision to proceed with submitting an application to surrender the permit transpired after the joint venture explored options to defer or amend work obligations, as was previously disclosed,” Tag Oil said.
Kaheru is located PEP 52181, some 8km offshore New Zealand, in shallow waters around 22m deep.
While a substantial investment, technically, Kaheru is considered a lower risk exploration opportunity with very high potential. It is on the same thrust belt play fairway as many successful Taranaki oil and gas fields. Through an independent report, Kaheru has the potential for undiscovered oil initially in place of more than 17 MMbbl (net to Tag Oil).
“The relinquishment of the block containing the Kaheru prospect is the last of several divestments, which have substantially reduced our future liabilities,” Toby Pierce, Tag Oil CEO said. Ultimately, the economics just didn’t stack up in today’s commodity markets.”
The Kaheru Prospect is referred to as the last pearl in a large, productive string of pearls located in the Taranaki Basin production fairway. The Taranaki thrust sets up a line of pools running north-south, all onshore, and Kaheru is simply a continuation of that trend a few kilometers offshore, Tag Oil said.
NZOG is the operator of PEP 52181with 35% stake. Partners include Tag Oil (40%) and Beach Energy (25%).
“From this point forward, we’re now in growth mode and plan to participate in the recently announced 2016 New Zealand block offer. Further, we continue to work on joint ventures and acquisitions to grow our portfolio of opportunities,” Pierce said.
Earlier this week, New Zealand launched its 2016 block offer petroleum tender with four offshore, and one onshore areas up for grabs.
The four offshore release areas, with a total acreage of 525,515sq km, are located in the Reinga-Northland basin, Taranaki basin, Pegasus and East Coast basins, and Great South-Canterbury basin. The onshore release area, at 1062sq km, is in Taranaki.
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