Royal Dutch Shell Plc  .com Rotating Header Image

National Business Review (NZ): High stakes in deep gas

High stakes in deep gas
820 words
12 May 2006
English
(c) 2006 The National Business Review

May 12, 2006

There's nothing to see here, say Todd and Shell, but is it a case of three-into-one along a hotly-contested stretch of Taranaki's gas-rich coastline?

Hugh de Lacy

There is no basis to suggestions that the Pohokura, Turangi and Mangahewa gasfields are all part of one giant field, according to Shell and Todd Energy executives.

Taranaki is rife with rumours that the owners of the fields are headed for unitisation processes under the Crown Minerals Act because they are all, in effect, sucking gas from the same MA72 payzone.

The National Business Review has learned that an expert analysis of the exploration and development data lodged with Crown Minerals suggests Shell-Todd's Pohokura well, due to start delivering gas before the end of the year, has the same well pressures and CO2/CO gas content as Greymouth Petroleum's recently announced Turangi gas strike.

Greymouth expects to start producing gas from the 144 petajoule (Pj) Turangi field this month.

Pohokura, jointly owned by Shell, Todd and Austrian player OMV, is the northernmost of the three petroleum mining permits, and just off the northern Taranaki coast.

It abuts Greymouth's Turangi on the coastline, while Todd's Mangahewa well, which has been producing gas since 1998, lies just to the south.

If the fields are contiguous, the three parties could be headed for the complex unitisation process that determines who owns how much of what.

Todd Energy chief executive Richard Tweedie scoffed at the rumours.

“There's no evidence of it at all,” he said. “That's quite clear from my knowledge of the geology of the respective fields.

“We drilled a terrace well in Taranaki recently that was part of the Pohokura licence, and it was dry, [suggesting] there was a separate structure between Pohokura and the shore.

“It'd be drawing a long bow to suggest the owners are headed down the unitisation road, and I can say unequivocally it would be resisted with the utmost vigour by not only us and Mangahewa but also the Pohokura partners,” he said.

Establishing a unitisation case would be “humungous,” involving the drilling of multiple wells, he said.

“You'd have to show that somebody's stealing someone else's hydrocarbons and the person pursuing that case would have to produce unequivocal evidence.”

That view was supported by Shell's external affairs adviser Steven Bartholomeusz, who said that while he had heard the rumours, “there's no truth to them.”

Proof of the three small fields actually being one large one would further complicate an already convoluted legal situation in the old PPL 38705 licence area, with Shell and Todd at loggerheads over who should be operating the 750Pj Pohokura field, and a group of former Southern Petroleum shareholders pursuing an insider trading case against Shell.

The latter suit, inherited by Shell through its takeover of Fletcher Challenge Energy in 2000, alleges Fletcher executives suppressed data from a 1995 deep gas study showing PPL 38705 – which included all three wells – was a single large field 4500m down.

That case, referred to as c150/99, is expected to come to trial early next year, with preliminary hearings determining Shell has to meet the plaintiffs' legal expenses win or lose.

Several of the former FCE executives now work for Greymouth Petroleum, whose chief executive, Mark Dunphy, could not be contacted for comment.

Auckland businessman Tony Gavigan, the spokesman for the disgruntled Southern Petroleum shareholders who have been pursuing the insider trading action for more than a decade, said he was encouraged by Greymouth's Turangi strike, announced late last month, because it seemed to indicate the FCE executives knew more than they told Southern Petroleum shareholders in 1995, when FCE acquired the remaining 15% of SP's shares.

“There's also a growing body of well-informed expert oil industry opinion that speculates the results of the Pohokura South 1b drilling were fudged when it was finally drilled in 2001 as the dust was settling on the Shell takeover of Fletchers,” Mr Gavigan said.

“The losers from that series of events appear to have been Fletcher Energy's shareholders, and now perhaps Shell's.”

He said that if suggestions the Turangi and Pohokura wells shared the same pressures and gas make-up turned out to be true, it would confirm that the 1995 deep gas study at the heart of the insider trading case was “spot on.”

Fletcher and Southern Petroleum jointly funded the study that “worked up the theory of a humungous deep gas and condensate field that stretched from Mangahewa to the coast and beyond into Pohokura,” Mr Gavigan said.

The information, vital parts of which Fletcher Energy allegedly withheld from Southern Petroleum, was used in FCE's successful mid-1995 bid for the Pohokura licence.

Shortly afterward it acquired the last 15% of Southern Petroleum's shares.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “National Business Review (NZ): High stakes in deep gas”

Leave a Comment

%d bloggers like this: