Wellington-headquartered oil and gas company L&M Energy confirmed plans on Thursday to drill a new well in the highly prospective Kahili oil and gas block, onshore east of Mt Taranaki in an area that produced successfully for two years before running unexpectedly dry.
L&M is partnering with Mosaic Oil NZ to drill in a fresh part of the permit (PEP53247), using new seismic survey data that suggests the permit's previous holder, Austral Pacific, had been unlucky to drain a "small, isolated fault block", which ran dry in 2004, after two years' production.
Austral Pacific subsequently lost the licence, having exhausted its cash, but left behind a gas processing station and connection the National Gas Corporation pipeline, through which Austral had been supplying Auckland network company with gas for resale.
The project involves conventional drilling rather than the controversial hydraulic fracturing method, or fracking, with which L&M's name was briefly associated last year when it noted the presence of substantial shale fields among its holdings.
L&M Energy's NZX-listed shares have more than halved in value in the last six months to 7 cents a share, and did not trade immediately after Thursday's announcement.
NZN