CAPITAL: Wellington

MONETARY UNIT: Dollar

REFINING CAPACITY: 98,000 b/cd

OIL PRODUCTION: 43,700 b/d

OIL RESERVES: 127 million bbl

GAS RESERVES: 2.45 tcf

New Zealand aimed to be 75% self-sufficient in liquid fuels by 2005 and to be totally self-reliant and a net exporter of liquid fuels before 2010, according Energy Minister Max Bradford.

The minister said the targets were achievable, given the increasing exploration in the country.

OIL and gas production accounted for about 60% of New Zealand`s primary energy supply. In 1998, the country was only 41% self-sufficient in liquid fuels, and 66% of its liquids production came from Maui field off Taranaki. Maui also accounted for about 70% of the country`s gas production.

Bradford said in 1996 explorers promised to spend $170 million on exploration over 5 years. That included 5,460 km of seismic survey, the reprocessing of another 4,700 km of seismic, and the drilling of as many as 25 exploration wells.

He said much of the seismic commitment had been fulfilled and companies had spent more than $300 million by late 1998.

Renewed interest in oil exploration had come mainly from a revamp of New Zealand`s petroleum licensing in 1996.

Companies could apply for any permit they saw as promising, provided they had suitable technical ability and financial resources.

The combined effect of the government`s taxes and royalty on oil production was cut to 47%.

East Coast basin

New Zealand established its first commercial hydrocarbons production outside the Taranaki basin in 1998, a dry gas well at Wairoa near the eastern shore of the North Island.

Westech Energy Corp., Denver, and Enerco New Zealand Ltd., Auckland, drilled the Kauhauroa 1 on a structure judged on seismic to cover 5-6 sq miles. It was in the East Coast basin, 150 miles east of nearest production in the Taranaki basin.

The well, 10 km north of Wairoa, stabilized at 11.5 MMcfd of dry gas from untreated Miocene Makaretu at 3,600-4,008 ft with 2,100 psi flowing tubing pressure. Shallow zones remained to be tested.

Westech and Enerco also had a discovery at their Awatera 1 well, which flowed 3.1 MMcfd of gas from pay at 1,954-2,021 m.

The partners increased the number of wells in their drilling program to six from four, including five wildcats and a Kauhauroa appraisal well.

They said the discovery confirmed the development potential of the Hawke`s Bay region. A 3D seismic program was planned for Hawke`s Bay and the Wairarapa area. Westech-Enerco planned to drill offshore in Hawke`s Bay, where waters were 60-100 ft deep.

The East Coast region had about 250 gas seeps, at least four major oil seeps, and 50 places where formations were impregnated or stained with oil.

About 40 wells have been drilled in the basin since 1974. The basin had drawn exploration attention, with nine new permits awarded in the preceding several years, and was fully covered by active permits.

Tyers Investments Pty. Ltd. and Tyers Petroleum acquired a permit in 1998 covering 4,009 sq km, mostly offshore, between the North and South Islands.

Other upstream

A Shell group had a significant discovery at the Maari 1 well in the Taranaki basin.

Partners were Shell (Petroleum Mining) Co. Ltd., Todd Petroleum Mining Co., and Cultus Petroleum NL, Sydney.

It was drilled off Taranaki, about 38 km south of the Maui B platform. It cut 56 m of net oil-bearing sands in the Miocene Moki and two other formations. It was expected to produce 2,000 b/d.

Maari 1 was only 800 m west of the Moki 1 discovery well, deemed subcommercial 15 years earlier despite good oil shows.

Fletcher Challenge Energy (FCE), Auckland, was developing Mangahewa gas field, about 25 miles east of New Plymouth, where it had a 100% interest.

It planned eight wells by late 1999 and more development drilling later. It also planned a coastal well to determine whether Mangahewa extended offshore.

FCE installed temporary gas processing facilities. The produced gas was being sold to Methanex New Zealand Ltd.

FCE expected to spend as much as $250 million on Mangahewa development. Plans included building a large gas processing plant. Commercial production was slated to begin in 2000.

FCE and Spectrum Exploration Ltd., New Plymouth, N.Z., formed a joint venture to explore the Taranaki basin off the western coast of North Island. It had a license for a 5,966 sq km area just north of Maui field.

The New Zealand government agreed to pay Maui Mining Cos. (Shell, Todd, and FCE) $56 million to resolve litigation concerning the government`s purchase of Maui offshore gas field.

Outage

The government announced plans to force competition in the electricity supply market by breaking up the state-owned power generator into competing firms. It also would divest power companies of their sales and distribution arms.

The legislation was a reaction to a month-long power blackout in Auckland`s central business district in early 1998.

Energy Minister Max Bradford said the changes would cut retail electricity prices by up to 20%.

Under the plan, Electricity Corp. of New Zealand (ECNZ) would remain state-owned but would be broken up into three competing companies.

Electricity supply companies (such as Mercury Energy, which supplied central Auckland) wouldn`t be allowed to own power lines.

Bradford gave power companies a year to find low-cost ways for customers to switch easily between suppliers or face a mandatory system which would enable them to do so.

On Feb. 21, four major power cables serving the Auckland business district went down, plunging the area into a continuing blackout which savaged businesses, forced universities and polytechnics to close, and sent corporations and banks out of town.

Power was restored after contractors worked nonstop to build a $120 million overhead power line down the main railway line into the city.

The temporary line would remain in place until late 1999, when a $110 million tunnel to house new cables is finished.

Antitrust charges

The Commerce Commission was prosecuting Shell New Zealand Ltd., Mobil Oil New Zealand Ltd., and Caltex New Zealand Ltd. on antitrust charges.

It said they had agreed to remove a discount on gasoline prices at 50 gasoline stations in Auckland.

The government abandoned plans to sell the nation`s largest coal miner, Solid Energy Ltd., saying a slump in world coal prices meant bidders reduced their offers.

Solid Energy operated coal mines throughout New Zealand and had been expected to bring $70 million, about half the amount anticipated a year earlier, before the government canceled the sale.

Liberty Oil Pty and Gull Petroleum (WA) Pty, both of Australia, were negotiating to share a multimillion dollar gasoline storage facility in the North Island city of Tauranga.