You are using an older browser version. Please use a supported version for the best MSN experience.

Collins: Big oil will return to explore

NZ Newswire logoNZ Newswire 21/03/2017 Paul McBeth
Man operates oil pipeline © Reuters Man operates oil pipeline

Energy Minister Judith Collins says she expects oil and gas companies to return to explore New Zealand as profit margins return to the industry.

Ms Collins launched the government's 2017 block offer in New Plymouth on Wednesday, allowing companies to tender for exploration rights to nearly half a million square kilometres, mainly offshore.

It follows a particularly weak year in 2016 when there was just one successful bid, by Todd Corp, for a permit in the Taranaki Basin.

The low number reflects a significant downturn in the sector.

"However, activity in New Zealand and globally is expected to pick up as operator margins improve," Ms Collins told the New Zealand Petroleum Conference.

Domestic exploration has dwindled after last year's slump in global oil prices below $US30 a barrel made forays into remote parts of the world, such as New Zealand, less appealing for major international players.

Since then prices have partially recovered.

Ms Collins said the growing volume of merger and acquisition activity both locally and abroad boded well for investment in the domestic sector, especially as the "frontier basins" in the broader Exclusive Economic Zone remain "largely underexplored".

Concerns raised by the Parliamentary Commissioner for the Environment about liability for the failure of onshore wells led to a consultation on potential responses to the issue.

Officials were also looking at offshore financial assurance to ensure operators had appropriate insurance cover for the cost of a spill, she said.

"We need to make sure the environment is protected, but I want to make sure that risk and cost are appropriately balanced."

2017 BLOCK OFFER:

* Total area of 481,735sq km

* 5102sq km onshore and 476,632sq km offshore

* Offshore areas in Northland/Reinga, Pegasus/East Coast, Hawke Bay, Taranaki and Great South/Canterbury

* Onshore areas in Taranaki and Southland

* A mix of off and onshore in Taranaki.

* Bidders have until September 6 to lodge their applications.

image beaconimage beaconimage beacon