Well’s failure a sign of the times
A newly-drilled well in Taranaki has been declared unsuccessful and a town usually bustling with oil and gas workers is learning to survive without the industry.
Canada-based oil and gas exploration company TAG Oil has had to suspend the exploration of Cheal-D1 - a 2400 metre deep well - after discovering it would cost too much to produce the little amount of ‘‘high quality’’ gas inside.
TAG spent $9.8 million on constructing the Cheal-D1 well pad among other operations.
The company would not disclose how much was spent specifically on the suspended Cheal-D1 well, nor how much gas was in inside.
Meanwhile in Stratford, which sits just outside TAG’s major exploration area, oil and gas workers have become a rare sight, townspeople have said.
Amity Court Motel manager Jason Kowalewski said fewer industry heads had booked in.
But he said it ‘‘hasn’t affected us a heck of a lot’’ as it had been ‘‘real quiet for a couple of years now’’.
‘‘When those guys are working it’s good for the town and it’s good as it keeps everything ticking along.’’
Down the road at Outdoor Power and Hire, owner Gavin Cox has taken notice of a slowing sector. ‘‘In general, it’s been quiet in the industry.’’
While Stratford District Mayor Neil Volzke agreed active exploration had a flow-on effect for the local economy, he said the production facility and maintenance projects brought benefits. However, he added, the Taranaki economy has diversified and is less reliant on oil, gas and dairy.
‘‘The economy as a whole is much more resilient these days.’’
But TAG forged on regardless, announcing in April a $25.7m investment in Taranaki land. Five wells were to be explored, including the failed Cheal-D1 and the successful Cheal-E8.
Drilling obligations in Cheal East area have now been fulfilled and TAG said they would look to neighbouring fault blocks and potential gas bearing spots in deeper Mt Messenger sands, which were found while drilling.
However revenues from oil and gas sales had fallen by 14 per cent from $6.3 million to $5.4m in the quarter ended June 30, TAG financial results released in August revealed.
This drop was primarily due to the decrease in average oil prices, which saw barrels dip to $23.09 from $27.46, TAG CEO Toby Pierce said in the report.