Tui drilling offers Taranaki economy a $110M boost

Tui drilling offers Taranaki economy a $110M boost

By Gavin Evans

Nov. 6 (BusinessDesk) - A successful side-track drilling programme proposed at the offshore Tui oil and gas field may boost the Taranaki economy by up to $110 million, a board of inquiry heard today.

Field operator Tamarind Resources says the drilling work planned next year could extend the life of the field out to 2025 – about six years more than might otherwise be the case – and extract about 7.5 million barrels of oil that would otherwise be left almost four kilometres below the sea floor.

The drilling programme itself, which will involve bringing in a semi-submersible rig, would provide the equivalent of 170 jobs for a year and inject $15.7 million into the local economy, according to an estimate by Insight Economics managing director Fraser Colegrave.

Should the drilling be successful, that regional benefit increases to $110 million over six years, including 180 jobs and an extra $80 million of household incomes.

Successful drilling would also generate about $90 million of taxes and royalties for the Crown.

Tamarind, which took over the 11-year old field last year, is seeking consent to drill up to four wells sidetracked, or deviated, from within three of the field’s existing wells in order to access parts of the field it hasn’t been able to drain to date.

Its application is being heard in New Plymouth by a three-member board a week after MPs debated the government’s proposed ban on the granting of new offshore exploration permits. Rights of existing permit holders are protected under the planned changes.

Tamarind country manager Jason Peacock noted the company is obliged by the terms of its permit to maximise recovery from the field and ensure the Crown receives a fair financial return for granting use of the hydrocarbon resource.

“Tamarind considers that by undertaking this development programme it is fulfilling its obligations under the Crown Minerals Act,” Peacock said in evidence filed for the hearing that started today.

When the firm lodged its application earlier this year, it estimated the planned drilling could bring in an additional $300 million to $500 million of crude oil revenue.

Tui lies in about 125 metres of water 50 kilometres off the Taranaki coast. It was the country’s biggest liquid hydrocarbons producer when it was commissioned in mid-2007 and has produced about 40.7 million barrels of oil to date.

The project, which comprises five wells and a moored floating production and storage vessel, delivered almost 13.5 million barrels of oil in 2008. Last year its production was down to 843,000 barrels, about half that two years earlier, according to government data.

The board, comprising David Hill, Glenice Paine and Dan McClary, was convened by the Environmental Protection Authority, which is responsible for activities in the exclusive economic zone. The legislation for the zone specifically bars the board from considering climate change issues, despite it being raised by most of the submitters opposing the project.

In his evidence, Peacock said the company supports development of the government’s Net Zero Carbon Bill.

But he noted that, even in a low-emissions future, oil and gas will continue to meet about half of the world’s energy needs by 2040. Oil demand is expected to grow until 2040, albeit at a steadily decreasing rate, while natural gas demand is expected to grow by 45 percent during the same time.

“In this light, Tamarind suggests that this development project plays a very small, but contributing role, in the stable transition of the New Zealand and global economy towards one which is less carbon-intensive.”

Kuala Lumpur-headquartered Tamarind believes the project’s impact on the environment will be minor and temporary, given it is drilling from within existing wells, that the work will last nine months at most, and that the rig contracted for the project does not stand on the seafloor.

The relatively new vessel, the Hai Yang Shi You 982, is the latest generation of semi-submersible rig and complies with the tough operating and environmental standards developed for Norway’s oil and gas sector.

It is a zero-discharge rig, meaning no storm water run-off or deck drainage goes into the sea without first passing through the rig’s treatment systems.

The hearing is scheduled to take three days.

(BusinessDesk)

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