OMV planning to invest over $500m in Taranaki

WELLINGTON: OMV expects to invest more than $500 million in Taranaki in coming years to maintain production from the offshore Maui and Pohokura fields.

The firm, which in December took over operatorship of the two fields from former partner Shell, is embarking on a ‘‘tremendous increase in activity,’’ Gabriel Selischi, OMV’s senior vicepresident for AsiaPacific, said.

That starts this month with a series of well interventions at Pohokura to restore production from the offshore component of the field. Compression at the field off the coast from Waitara will also be improved.

But it is the ageing Maui field — in production for 40 years this year — that excites Mr Selischi.

‘‘We think there is a redevelopment potential in Maui,’’ he told BusinessDesk.

‘‘One of our projects is to accelerate those opportunities.’’

The company is hoping to make a final investment decision this year on a project to drill up to five wells from the MauiA platform. The wells would be sidetracked from existing wells using a platformbased rig and could be delivering gas in 2020, Mr Selischi said.

Maui, 35km off the Taranaki coast, was discovered in 1969 and brought into production a decade later. The field, one of the biggest in the world when discovered, has provided most of this country’s gas and was still the country’s secondlargest producer just three years ago.

But Maui is in decline, and proven and probable gas and lpg reserves were estimated at 151 petajoules in January 2018.

At recent production rates, that could be exhausted by 2024, according to Ministry of Business, Innovation and Employment data.

Mr Selischi understands the significance of Maui to New Zealand’s economic development and the near love affair some in the local industry have for it. If discovered today it would probably be developed for lng export.

He is also aware some people still see ‘‘a lot of potential’’ at Maui. He said a MauiC development would be nice, but Viennabased OMV is taking a very conventional approach to further development there.

Shell extended Maui’s production through a series of sidetrack programmes since 2004.

Mr Selischi said the future work at MauiA, and a similar programme at the more westerly MauiB platform, could extend production by fiveto10 years and into the late 2020s.

The MauiB work would probably require a jackup rig and will take longer to plan.

New Zealand industry and households rely on four gas fields — Pohokura, Mangahewa, Maui and Kupe — which typically account for more than 85% of gas production.

A prolonged outage at any of them, as occurred twice last year at Pohokura, can quickly tighten supplies and result in increased power prices and production risks for New Zealand’s food, steel and wood processors.

Last year, the Government banned new offshore exploration. It said the prohibition was necessary to reduce emissions longterm and that existing exploration permits would deliver sufficient new reserves to maintain security of energy supply.

More than 80% of the country’s exploration acreage is outside Taranaki, so any discovery cannot be delivered to the North Island’s pipe network.

OMV’s $US578 million ($855 million) purchase of Shell’s remaining New Zealand interests made it the country’s biggest oil and gas producer. It also operates the offshore Maari oil field and has exploration interests in Taranaki, off the Wairarapa coast and in the Great South Basin.

Mr Selischi said New Zealand had previously taken gas supplies, and the energy flexibility they provide, for granted.

But a combination of ageing fields and a lack of recent discoveries mean reserve capacity is now tightening. Those pressures may increase over time as expansion of renewable electricity generation — particularly through variable wind and solar production — increases the need for flexible gas supplies.

While the firm’s East Coast and Great South Basin interests provide longterm options, Mr Selischi said his focus is firmly on Taranaki. That will include two exploration wells there next summer.

He noted that, until last year, Pohokura’s availability had been very good at about 99%.

As the field ages, more effort will be required to maintain production near its design plateau level. The field has further development potential, but the firm has no nearterm plans for additional drilling there, he said.

This week the company will begin a maintenance programme at Pohokura aimed at restoring production and reducing water cut — the ratio of water produced compared to the volume of total liquids — from some wells.

Last month the firm said that was likely to halt production from the field’s offshore wells for about 12 days during February and a further 18 days during March and April. — BusinessDesk

❛ One of our projects is to accelerate those opportunities