Oil company Shell is going ahead with a $200 million test well for natural gas in the Great South Basin.
Shell New Zealand chaiman Rob Jager. Photo: SHELL NZ
The decision by Shell and partners OMV and Mitsui E&P comes after they spent three years surveying the unproven area off the Otago-Southland coast.
The test well targeting a new natural gas find at least the size of the Maui field in Taranaki is to be drilled about 150km offshore from Dunedin in 1350 metres of water in about two years' time.
Shell New Zealand's chairman Rob Jager said on Tuesday that the decision is very significant and shows stakeholders in the companies have enough confidence gas could be found to proceed.
"We compete for exploration funding globally, so to get shareholders' support for drilling in the Great South Basin is really exciting."
But Mr Jager said the project is not a slam-dunk and chance of the success for the gas field is about 30%. He said only a test well would prove whether there is a deepwater gas field able to be developed.
Although the partner companies have not decided whether to use Dunedin or Invercargill as their service base, Mr Jager said jobs would be created.
Shell has permits for areas designated in yellow in the Great South Basin. It intends to drill the test well in the left part. Photo: SHELL GSB