Oil report points to billions for North

Imran Ali | 8th March 2010

Northland could be billions of dollars richer if suspicions of oil off the coast prove correct.

Preliminary assessments around Reinga Basin, 440km northwest of Cape Reinga, have discovered a likely working petroleum system.

Oil companies must now invest millions in exploration - but if oil is found there, billions in commercial petroleum trade and investment opportunities await the region.

Dr Vaughan Stagpoole, lead author of the Crown Research Institute GNS Science report that points to possible oil-bearing sedimentary rocks, said benefits to Northland could reach billions.

He said if Taranaki, with up to 90,000sq km  of the Great South Basin for oil and gas, brought billions in spin-offs to the Southland economy, Reinga Basin, with bigger oil fields, could reap similar benefits.

"It all depends on the interest of the oil companies. There could be oil there [Reinga Basin] but it may not be at a commercial level," Dr Stagpoole said.

"It's a risk but it's probably worth the risk because there are signs of hydro carbon in the seabed and surface ... it's got a similar geology as that of Taranaki."

Early this year, the Government opened bids for blocks in the Reinga Basin and the offer will close in August - the same time as that of the Northland Basin.

The successful bidder is likely to be announced  this year.

Dr Stagpoole said it could take five years or more of exploration work, which included site surveying and rock sampling, before drilling could begin.

But there had been cases in New Zealand where the process took less than three years, he said.

Dr Stagpoole said the geology in the 150,000sq km Reinga Basin was less complex than the Northland Basin, making it more attractive to explore.

But it is further from land and in slightly deeper water, which can be a challenge for explorers.

He said the positioning of an oil rig if commercial trading started could be located away from Northland because of, among other facts, costs involved.

General manager of Enterprise Northland Jo Douglas  said although her organisation had not done a detailed economic impact of commercial oil trading in Northland, potential benefits could be huge. She said steel-makers or engineering firms in general would directly benefit.

Reacting to the New Refinery Company's capacity to cater for additional demands, refinery spokesman Greg McNeill  said globally economic viability for explorer and user determined where oil got refined.

"We currently refine a small amount of New Zealand crude and can refine more if our customers need it and it makes commercial sense for them to do so," he said.