Spanish oil company Repsol has signed an exploration and production agreement with the Government of Guyana.
The four-year agreement, signed yesterday, will allow Repsol to search for hydrocarbons in the Kanuku block, approximately 161 km offshore Guyana, the only South American nation in which English is the official language.
According to GINA, Guyana’s Government Information Agency, Repsol will first conduct 2D and 3D marine seismic surveys, which will be followed by an exploration well in the second phase of the licence.
The company was last year involved in drilling the Jaguar-1, a high pressure, high temperature (HPHT) well, offshore Guyana. The well encountered some hydrocarbons but the partners in the prospect decided to plug the well on safety criteria after reaching a point in the well where the pressure design limits for safe operations prevented further drilling to the main objective.
The sea off Northland‘s entire west coast has been opened up for oil and gas exploration, something the Government says could pour up to $2 billion a year into the economy and create thousands of jobs in the region.
Energy and Resources Minister and Whangarei MP Phil Heatley yesterday welcomed the Government’s starting the process for awarding oil and gas exploration permits in seven onshore and three offshore blocks around the country. The offshore areas include the Northland/Reinga Basins, which stretch from the entrance to the Manukau Harbour, up Northland’s west coast to above Cape Reinga in the Tasman Sea.
A survey by Crown Research Institute GNS Science found the Reinga Basin could hold the most promising oil and gas fields in New Zealand.
Mr Heatley said the potential benefits could be game changers for Northland: “Down in Taranaki oil and gas industry provides over 5000 jobs and puts $2billion a year into the economy. Taranaki provides a great model of how safe and responsible oil and gas exploration can happily work side by side with primary industry and tourism.
“Oil and gas finds in Northland could be worth even more, and provide just as many jobs as those in the Taranaki because the Reinga Basin has been tagged as one of the most promising fields in New Zealand. But Northlanders will never know for sure until experienced companies are allowed to explore. If they find something, locals can then have an informed debate about whether we allow them to go after it.”
The Ministry of Business, Innovation and Employment had started consulting iwi and councils, and he encouraged iwi and councils to participate. “Their feedback ensures that areas of sensitivity are carefully considered before the areas to be tendered are finalised,” Mr Heatley said. No schedule-four conservation or World Heritage sites would be included in the areas for exploration.
But Te Runanga o Te Rarawa chairman Haami Piripi said his iwi was not happy with the proposal and felt any consultation would be a “facade”.
“There’s nothing from the exploration regime that will benefit iwi, other than possibly some jobs in the extraction process. The Government is going ahead without first dealing with the big issue, the customary interest iwi have in this resource,” he said.
“We have a legal opinion saying iwi do have a customary interests in oil and petroleum resources. The Waitangi Tribunal issued a report that recognised that Taranaki iwi have an interest in their petroleum resource, but that has been rejected by the Government.
“So we say we legally have a customary interest there, but the Government is trampling on those interests by ignoring them. It will be a facade consultation.”
He said regardless of what iwi thought, the Government would ignore their concerns if they interfered with its plans. “But we will raise our objections.”
Northland Chamber of Commerce head Tony Collins welcomed the move, saying the region needed the jobs and opportunities exploration could provide. “If you look at Taranaki it’s been a positive thing there and it should be positive for Northland.
“There’s always a balance between risk and reward, but if they use best practice for extraction the chances of anything going wrong are very, very minor,” Mr Collins said.
“This could actually create a lot of opportunities for iwi. They could become involved and use it to help lift the aspirations of their people.”
The contract, divided into exploration, development and production phases, is valid for approximately 30 years. The parties have agreed to a minimum working program for the exploration phase, which includes geological surveys and exploration drilling. Apache will take full responsibility for all costs during the exploration phase.
If a commercial find has been made and brought into production, Apache will receive reimbursement for such costs. The contract offers Staatsolie the opportunity for a stake in the development phase of up to 20 percent.
Block 53 is located at approximately 130 kilometers off the northwest coast of Paramaribo. The exploration period under the contract is divided into two phases with a combined investment of approximately US$230 million. The duration of the first phase is scheduled for three years with an optional second phase of two and a half years. In addition to a large 3D seismic survey, two wells will be drilled in the first phase with a third well to be drilled in the optional second phase. The production sharing contract explicitly deals with inspection, safety and the environment. There are also special provisions for employment of local cadre, training, social programs and the dismantling of facilities at the end of operations.