ECA's stake increases in promising New Zealand well

ECA's stake increases in promising New Zealand well

by Neil Ritchie, New Zealand

JUST a week after winning a second term for its only offshore Taranaki licence, Energy Corporation of America is taking almost complete control of the permit ahead of drilling the promising Albacore-1 well.

Permit partner Mighty River Power has dropped its stake in PEP 38491 from 50% to only 10%, with ECA – which operates as Westech Energy in New Zealand – almost doubling its equity to 90%, according to the Crown Minerals Group of the Ministry for Economic Development.

Westech New Zealand country manager Clyde Bennett today told PetroleumNews.net that government-owned MRP reducing its equity in the lease would not affect the company’s exploration plans for the acreage.

“This does not impact anything; it does not affect our plans to drill the Albacore-1 well,” Bennett said. 

He declined to comment further but industry commentators say they are disappointed, though not surprised, by MRP’s drastic reduction in participation.

“Albacore was always going to be a difficult one for MRP, with its focus on gas,” one source told PNN.

He said MRP’s priority in exploration had always been on finding gas for its Southdown power station in south Auckland and for its wholesale and retail gas customers. 

It first joined forces with now-departed United States independent Swift Energy early this decade but failed to find any commercial gas with several onshore Taranaki wells. 

MRP then became a partner in some onshore South Island licences of listed junior explorer L&M Petroleum, which has yet to find any commercial gas on the West Coast or in Southland.

A second source said the focus for PEP 38491 had also shifted over time. 

Initial geological and geotechnical evaluations had suggested the possibility of a “Karewa lookalike”, the source told PNN, referring to the more northern offshore Karewa gas discovery that Todd Energy announced over five years ago but has yet to develop.

Then studies turned to prospects more likely to contain oil, such as the nearby Kora prospect previously explored by United States independent Arco Petroleum during the late 1980s and early 1990s.

Arco drilled several wells in and around the Kora structure and struck oil less waxy than most Taranaki crudes, though recoverable reserves were deemed to be subeconomic at those times of relatively low world oil prices.

Westech’s main focus offshore is oil and the company believes Albacore holds great promise.

It is understood that Westech and MRP have already signed, or are about to, a contract with international drilling company Ensco to utilise the jack-up Ensco Rig 107 to drill Albacore-1 late this year or early next, after it finishes drilling for Maari oil field operator, Austrian giant OMV.

OMV and its partners – Todd Energy, Horizon Oil and Cue Energy Resources – are drilling the extended reach horizontal Manaia-1 appraisal well, before drilling a development well to access the M2A oil reservoir above the primary Moki zone, from the Maari wellhead platform.

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