This article expands some of the information from the recent news release on Apache.
Apache rides into NZ
Neil Ritchie, New Zealand
Monday, 5 September 2011
US major Apache Corporation has entered the New Zealand exploration scene, teaming up with Canada-listed junior TAG Oil to explore conventional and unconventional petroleum plays on the East Coast.
TAG said over the weekend that Apache would earn up to 50% stakes in TAG’s three onshore East Coast leases by contributing up to $US100 million ($A943.8 million) over the next four years.
“TAG Oil is excited and honoured to partner with Apache in the East Coast Basin to achieve a common goal of converting the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner,” TAG chief executive Garth Johnson said from Vancouver.
“We are planning an aggressive exploration program with Apache, with a starting date of September 2011 to initiate seismic acquisition, with drilling to begin in early 2012.”
Industry commentators say the entry of Apache is a very welcome sign that the country is now firmly back on the radar of overseas explorers following recent unsuccessful exploration efforts, particularly the 2010 six-well offshore campaign by the Kan Tan IV semi-submersible rig.
Apache – the third new major in New Zealand during the last 19 months – follows fellow US major Anadarko, which first joined Origin Energy in offshore Canterbury Basin block PEP 38262 in February 2010, and Brazilian oil giant Petrobras, which won the frontier offshore Raukumara Basin block PEP 52707 in June last year.
“This is great news, another reputable major,” Petroleum Exploration and Production Association of New Zealand executive officer John Pfahlert told EnergyNewsBulletin from Wellington this morning.
“And this is confirmation, once again, that the government’s enthusiasm for, and promotion of, the responsible development of our all natural resources, including oil and gas, is starting to pay dividends.”
Pfahlert added that it seemed an obvious move for Apache to cross the Tasman after successfully building a large presence in Australia over the years.
TAG chief operating officer Drew Cadenhead also told ENB this morning that Apache had “stacked this (East Coast) potential up against other opportunities in the world, combining all the factors of exploring in New Zealand ... and determined that this opportunity warranted a potential $US100 million investment to find out more”.
He said Apache was interested in both the conventional and unconventional petroleum potential of the East Coast Basin.
Apache will pay 50% of costs already incurred by TAG in exploring leases PEP 38348, PEP 38349 and PEP 50940, as well as providing TAG a full carry over three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs.
The planned exploration program will be conducted over the next four years, with the phases involving the acquisition of 2D and/or 3D seismic, together with drilling, with Apache earning increasing interests in the leases.
Apache will be operator for all activities, excluding the initial four vertical wells that TAG will operate with Apache’s assistance. Apache will spend up to $US100 million on completion of the third phase to earn a total 50% interest across the leases. At the end of the third phase, TAG will remain operator but will assign operatorship to Apache if the US major commits to phase four operations, when all future costs will be shared equally.
During the first phase, Apache will earn a 50% interest in less than 1% of TAG’s total East Coast acreage after operations are concluded and by committing to the second phase.
Cadenhead told ENB this initial phase would see 160km of 2D seismic, plus four vertical wells drilled to various depths between 1500-3000m.
“These wells will test a variety of play types, including conventional structural and stratigraphic prospects, as well as unconventional source rock prospects. We’ll start the seismic program early in the summer and hope to be drilling the first wells by March 2012.”
He said the land involved in drilling the wells equated to two “spacing units” – a term commonly used in North America and equivalent to one “section” of 640 acres.
“Apache will earn a 50% interest in a 1280 acre block around each of the four wells they will drill, with the total 5120 total acres equating to less than 1% of TAG’s total East Coast Basin acreage.
“Once they have finished phase two obligations and committed to phase three, they will have earned a 25% working interest in all of TAG’s 1.7 million acres in the East Coast Basin and once they have finished phase three obligations and committed to phase four, they will have earned another 25% working interest in all of TAG’s East Coast Basin acreage.
“Obviously we are very pleased with our new partnership with Apache. Development is in the early stages, but we look forward to working together with government and local stakeholders on the East Coast.
“We feel this validates our acreage prospectivity and brings a massive influx of technical and economic power to our continuing New Zealand programs.”
AI
