Widespread Energy is yet to determine the commercial potential of shallow oil shows at its Kotuku permit on the West Coast.

 

While the company did not reach its drilling target depth of 250 metres at the Widespread 1A well at PEP 38526, two separate oil bearing zones were encountered closer to the surface than expected.

"We encountered traces of oil at three different levels; two levels are in oil sands at depths between 18 metres and 36 metres, and further down we encountered cold oil between depths of 86 metres and 90 metres," chief executive Chris Castle says.

The company is still assessing the characteristics of the resources. Some of the interpretations of the drilling results which have been undertaken by various oil and gas geologists have returned conflicting results.

"We had quite interesting results and we are still doing more work analysing those results before we decide what to do," Castle says.

Once the characteristics of the cold oil resource are better understood the company will decide whether to determine its lateral extent.

"The cold oil is the eight mile formation which covers a large part of our licence. So if it can be established that it is consistent throughout the licence there could be quite a lot of oil there - albeit cold oil."

Because the oil sands are at lower depths it is likely that open-cast mining would be required to exploit the resource, Castle says. Cold oil is commonly extracted overseas by drilling a number of wells and injecting heat. Kotuku also has coal seam gas targets, which third parties have shown a commercial interest in, he says.

Widespread has an 11.8 per cent interest in Green Gate, which plans to start drilling at an onshore Taranaki licence in the fourth quarter.

Green Gate's 374 sq.km south Taranaki license, PEP 51150, is adjacent to Shell and Todd Oil Services' Kapuni field to the west, and Origin Energy's operating Rimu/Kauri field to the south east.. Castle says that it is a good ‘address' to be involved in, and Widespread would be comfortable if development reduces its holding.

"Stacey Radford is the majority shareholder in Green Gate and we have the utmost confidence in him," he says. "Depending on how things are structured we might dilute further from 11.8 per cent."

"If there is a successful strike, even a 1 per cent interest would be pretty good for a little company like us.''