New Zealand’s tightening domestic gas market is creating opportunities for producers capable of bringing additional supply online — and potentially storing it for when the country needs it most.
In the latest episode of The Capital Compass, Ricki Lee speaks with New Zealand Energy Corp. CEO and Director Toby Pierce about the company’s producing portfolio in the Taranaki Basin and its plans for the flagship Tariki project.
This content has been prepared as part of a partnership with New Zealand Energy Corp. and is intended for informational purposes only.
New Zealand Energy currently has approximately 500 barrels of oil equivalent per day of gross production across its portfolio. Pierce says a series of planned well interventions and workovers could ultimately add approximately 1,000 barrels of oil equivalent per day, with much of that activity weighted towards the first calendar quarter of next year.
The company also owns the Waihapa Production Station, giving it infrastructure through which it can bring its own production online while potentially processing third-party volumes for a fee.
At Tariki, however, the longer-term opportunity extends beyond production. New Zealand Energy is working towards converting the depleted gas field into an underground storage facility targeting approximately 15 to 30 billion cubic feet of working capacity.
Pierce says the field has historically produced more than 52 Bcf of gas and could ultimately provide storage equivalent to roughly a year of New Zealand’s domestic requirements.
The project is progressing through engineering and commercial discussions, including talks with Genesis Energy following an MOU signed in November. Securing an offtaker is expected to be a key requirement before a final investment decision.
Watch the full interview for more on New Zealand Energy’s production plans, infrastructure position and the potential role Tariki could play in the country’s future energy security.
Transcript
This transcript has been lightly edited for clarity and readability.
Ricki: What happens when a depleted gas field gets a second life — not just as a source of energy, but as infrastructure designed to help secure an entire country’s energy supply?
Today, we’re looking at New Zealand Energy Corp., an established producer with a portfolio of producing assets, infrastructure and development opportunities in New Zealand’s Taranaki Basin, including its flagship Tariki project.
New Zealand has a particularly interesting energy market: domestic gas production is declining, there are currently no gas imports, and periods of tight supply have pushed spot prices significantly higher.
For New Zealand Energy, that backdrop creates opportunity across the business: increasing production from its existing assets, bringing additional wells and reserves online, leveraging its infrastructure position, and advancing Tariki — first as a source of gas production and, longer term, as a potential underground gas-storage facility.
Joining me to discuss New Zealand Energy’s broader portfolio, Tariki and the milestones ahead is Toby Pierce, CEO and Director of New Zealand Energy Corp.
Toby: Thanks, Ricki. Happy to be here.
Ricki: It’s a pleasure to have you with us. So, Toby, before we look at the individual assets, can you set the scene for us? What makes New Zealand’s gas market so unusual, and why does this combination of declining domestic supply and no current import infrastructure create an opportunity for New Zealand Energy?
Toby: High prices overall in the gas markets create a significant opportunity for ourselves and any player that has gas assets in New Zealand. Historically, Maui, a great big offshore field, produced substantial amounts of gas at low prices for New Zealand. A large industry was built up around that, and now that the Maui field is at the end of its life, there is a big gap between supply and available resources.
Ricki: And New Zealand Energy already has producing assets in Taranaki and has been working to increase production from opportunities including Ngaere and Copper Moki. Can you walk us through the existing portfolio, where production stands today, and where you see the most immediate opportunities to grow production and cash flow?
Toby: Absolutely. Outside of our Tariki gas storage project, we have two assets. One is oil production at Ngaere and Waihapa, and second is the Tariki gas production. Overall, we have about 500 BOE per day of gross production across the portfolio. We believe we have access to additional resources and reserves and can bring those on in a tidy fashion.
Ricki: And you also have an established infrastructure position through the Waihapa Production Station. How important is owning infrastructure in a mature producing basin like Taranaki, both for your existing operations and as you look at future development opportunities?
Toby: It’s very important, Ricki. It allows us to bring production on very quickly. In an area that is fairly highly populated, it allows us to tie things in across our portfolio. It also allows us to help other people — assist other people, for a fee, of course — bring their production online as well, which overall enhances our economics.
Ricki: Let’s turn to Tariki. You’ve already restarted the Tariki-1A and Tariki-5A wells this year, and you’re now working towards continuous production. What have those initial production tests told you about the field, and what needs to happen to establish Tariki as a meaningful source of gas production?
Toby: The great thing about the data we received was the pressures dropped a lot less, which signifies that the resources may be a lot larger for recoverable gas.
Going forward, we plan to bring Tariki-5A back online. We have the equipment now that will allow us to do that. In addition, both Tariki-1A and Tariki-5A gas production should trend higher towards our maximum facility capacity of approximately six million cubic feet per day.
Ricki: But the bigger vision for Tariki goes beyond simply producing the remaining gas. You’re looking to convert the depleted field into an underground storage facility with a targeted working capacity of around 15 to 30 billion cubic feet.
Why is Tariki particularly well suited to gas storage, and how important could a facility of that scale become to New Zealand’s energy system?
Toby: It could be a very important piece of the puzzle in that it is right at the heart of the backbone of all infrastructure. It’s an extremely good reservoir that you can both inject and produce gas out of.
Remember, it’s produced over 52 Bcf over the life of the field. It’s also of a size that would meet New Zealand’s domestic needs for approximately a year.
So, in times of very dry weather where the dams aren’t filling or the wind isn’t blowing, the gas backbone that the gas storage business could deliver would be significant.
Ricki: You’ve already completed much of the geological and regulatory work, and the project is now moving through front-end engineering and discussions around customer capacity. What still needs to fall into place before you can make a final investment decision, and how are those commercial discussions progressing?
Toby: The discussions are progressing well. It’s no secret we’re in discussions with a group called Genesis Energy. We signed an MOU back in November of last year. Those discussions are ongoing.
We are confident that we’ll reach a conclusion to that activity here shortly. And that’s the key piece to the FID decision — making sure we have an offtaker to move forward with.
Ricki: And finally, Toby, when investors look at New Zealand Energy over the next 12 to 18 months, there are really two stories developing in parallel: growing the underlying production business and advancing the larger Tariki opportunity.
What are the key milestones investors should be watching across the entire company, and what could successful execution of that strategy ultimately mean for New Zealand Energy?
Toby: Beyond the Tariki gas storage business and the decision to reach FID, we have a whole host of upcoming well interventions and workovers.
Those individual workovers, while relatively small, will add up to potentially 1,000 barrels of oil equivalent per day in production across the portfolio. That will take place over the next three to six months. They’re fairly heavily weighted in calendar quarter one of next year.
We see lots of activity, and we’re excited to get going finally after a period of work to get our infrastructure up to speed with the various volumes that it may need to take.
Ricki: Well, Toby, thank you again for joining us today and giving us a closer look at New Zealand Energy’s investment opportunity.
Toby: Thanks, Ricki. Appreciate it.
Ricki: For more information, you can visit newzealandenergy.com. I’m Ricki Lee, and this has been The Capital Compass. Thanks for watching. We’ll see you again next time.