Oil and Gas Exploration Opportunities in New Zealand
New Zealand Oil and Gas sector is bursting with exploration opportunities. Companies investing in this sector are able to explore, develop and produce, and also enjoy the advantages of an international oil and gas portfolio without any economic and political disadvantages. The NZ fiscal terms and permitting regime is ranked best amongst the world and the oil produced in NZ is sold at global prices. The companies are likely to benefit as NZ also has a booming domestic market.
Most of the oil exploration in NZ has been concentrated around the Taranaki Basin where 500 exploration wells have been drilled. However, the NZ sedimentary basins still remain unexplored and many of them show presence of oil seeps and the exploration data also unveiled structures with high hydrocarbon potential. There have been many onshore gas discoveries in the past such as East Coast Basin, Great south basins and offshore Canterbury.
The total primary energy supply in NZ is expected to grow at 1.65 annum between 1995 and 2020 from 591 to 874 PJ pa. Though the gas consumption reached its peak in 2000 at 208 PJ pa and it is expected to decline to about 98 PJ pa by 2020, which is an average decline of 2.4% pa in consumption. But this does not necessarily dim the bright future expectations in this sector as demand for oil is expected to grow strongly during this period. The demand for oil is expected to reach 338 PJ pa in 2020.
NZ was considered to have oil reserves of 778.2 PJ as of January 1986. The NZ government is keen to augment the oil and gas supply by developing new oil reserves. The Oil and Gas exploration sector is considered to be one of the sunrise sectors as new discoveries in this sector are necessary to fulfill the domestic demand as well as increase the level of self dependency and minimize the expenditure on imports of oil. The NZ government has formulated a unique method to achieve its oil and gas exploration objectives. It has developed a 'Reward For Effort' model for Oil and Gas exploration activities in NZ.
The 'Reward For Effort' in the present analytical thinking is defined as reserves discovered per kilometer drilled. This helps in deriving the estimate of reserves drilled for each kilometer and dollar spent for each exploration. Since the cost of exploration has negative effects on exploration activity, the government of NZ has shown ample evidence that it will bring positive effects of change that will favor exploration of new reserves in NZ.
The Government of NZ has already made the information available about the petroleum potential in its study report. Transparency of information in allocation and royalty regimes, and simplicity of procedures have improved the attractiveness of Oil and Natural Gas Sector in New Zealand.
Oil was the third largest export earner in 2008 for NZ and the opportunity to sustain the growth of this sector is widely available by ways of new exploration projects. The government is poised to maintain the momentum in this sector. Currently many companies are busy with new exploration projects in New Zealand's Challenger Plateau, Bellona Trough area, outer Taranaki Basin, and Northland East Slope Basin area.
The O&G sector promises foreign investors high growth as government has announced a five year continuation of an exemption for offshore oil and gas exploration in its 2009 budget. The government also provides tax breaks to nonresident rig operators. In addition, the government has set aside a total of $20 million over three years that will be allocated to the seismic data acquisition program run by Crown Minerals, which is in charge of the administration and promotion of New Zealand's oil and gas.