Shell, OMV, Mitsui to drill deepwater well in New Zealand

WELLINGTON Tue Jan 7, 2014 1:13am EST

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WELLINGTON Jan 7 (Reuters) - Royal Dutch Shell, Austria's OMV and Japan's Mitsui will drill an exploration well off New Zealand's southeast coast, becoming the latest group to search for natural gas in the country's largely untapped deepwater basins.

The Shell-led project would follow a programme by Anadarko Petroleum of the United States to drill two deepwater wildcat wells in New Zealand this year in a joint venture with Australia's Origin Energy Ltd.

Anadarko has already started drilling its first well off the west coast of the North Island.

After decades of neglect, interest in exploring in New Zealand's rough seas has been on the rise following the development -- spearheaded by Shell -- of floating LNG facilities, as it means gas can be processed for shipping without having to build an expensive onshore plant.

Shell on Tuesday said it planned to drill an initial project well in the remote waters of the Great South Basin in 2016.

"We're very confident that any find will be natural gas rather than oil. We believe there's less than a 1 percent chance that there's going to be oil," Shell New Zealand Chairman Rob Jager told Reuters.

"It's most likely going to be a gas export development," he said, given the limited size of New Zealand's domestic gas market. Shell saw the possibility that any find could lead to a floating LNG development, Jager said.

The Anadarko and Shell projects follow a decades-old lull in deep-water drilling in New Zealand's frontier basins.

U.S.-based Hunt Petroleum halted exploration in the Great South Basin in the early 1980s due to harsh conditions and political red tape.

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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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