Twenty-five blocks are selected by New Zealand in a bidding round that covers onshore and offshore for both North Island and South Island, including coal-seam gas acreage.

For the first time, New Zealand will be opening new offshore areas by going with selected blocks to attract broader participation.

“This is a chance to reposition interest in New Zealand,” Kevin Rolens, director, petroleum, New Zealand Petroleum & Minerals, told Hart Energy E&P Online at the 2012 NAPE Winter Expo in Houston on Feb. 24. 

“We’re looking for new interest, new players.  New Zealand only produces from the Taranaki Basin and wants to open new basins to exploration and potential production.  That would be a big win for us,” he emphasized.

So far, the bidding round has drawn interest from national oil companies (NOCs) in Asia, including China and Korea, he said.

He pointed out that this was the first time in about 10 years that New Zealand had participated in the NAPE conference.  However, it was an opportunity to introduce more companies to the changes in how the country will be conducting block offers in the future.  “We’re going with this approach to see what happens with the level of interest,” he noted.

Beginning Feb. 1, 2012, New Zealand Petroleum & Minerals will publish annual block offers for competitive bidding.  The “first-in, first-served,” priority-in-time method of permitting has now been removed.  Exclusive use of the block-offer approach brings into effect the government's block-offer strategy that was announced last August.  

David Binnie, general manager, New Zealand Petroleum & Minerals, explained, “Priority-in-time permitting limited the government’s ability to strategically manage New Zealand’s oil and gas resource. It was a reactive approach, where companies could apply to explore any area in New Zealand at any time.”

“An annualized approach will reposition New Zealand in the international market and should attract significant inward investment. A recent report into future royalty income showed that a 50% increase in exploration could increase royalties to $12.7 billion,” he added.

The 2012 offer includes 25 onshore and offshore blocks with the tender starting in April 2012 subject to government approval. The proposed blocks cover approximately 40,285 sq km of offshore seabed and approximately 5,704 sq km of land in Waikato, Taranaki, Tasman, the West Coast and Southland.

The block offer includes new areas in the Pegasus Basin, an attractive block on the east coast of North Island and coal-seam gas blocks, Rolens said.

The invitation for bids is currently scheduled to begin April 27.  The bid round will close at 4:30 p.m. local time on Sept. 21.  Any bids received after that time will not be accepted.

The bid evaluation period is from Sept. 22 to Dec. 20 with the public announcement of the awards on Dec. 21.

Each bid will be assessed based on corporate profile, financial capability, technical capability and quality of work program.  Companies can bid on more than one block.  If there is a group of bidders for a particular block, the companies will be evaluated individually and as a group.

Rolens noted that the government has 3D seismic available over a lot of the areas being offered, especially in the Taranaki Basin.

“All seismic data comes open file after five years,” he explained.  “We make it available to investors free of charge.”

The ministry is consulting with iwi and local government in the areas where the proposed blocks are located. This consultation will inform final decisions on the blocks for 2012.

Twenty-five blocks are being offered in different areas on both islands.

The interest in New Zealand is growing, he emphasized.  Recently, Anadarko Petroleum acquired interests in three blocks in the deepwater Taranaki and Cantebury basins. 

As Anadarko noted in its 2011 annual report, Anadarko New Zealand operates approximately 11.5 million exploration acres in the Taranaki and Canterbury basins in New Zealand. A 3D seismic survey of approximately 1,100 sq miles was completed on the Taranaki block in 2011, and a 2D seismic survey of approximately 2,400 miles was acquired over the Canterbury blocks. Two exploration wells, one on each block, are planned for late 2012 subject to rig availability.

Apache came into a resource play on the east coast,” he added.

The market for oil and gas from new exploration will likely be Asia.  “We’ve got excess natural gas right now,” Rolens said.  “Earlier this year, Todd signed an agreement with Methanex to reopen its mothballed methanol line.  Two trains are mothballed.  Additional gas supplies will start the second train.  About 90% of the methanol would be going to Asia.”

Any discoveries off South Island would likely be developed for export.  “Asian companies are looking for new sources of energy to go straight to Asia,” he stated.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.