TAG Oil Blog

Shallow well development and exploration drilling update

Posted by Denise della Santina on May 15, 2014 11:50:00 AM

With all our recent financial news and Cardiff’s deep drilling updates, shallow oil and gas developments at Cheal and Sidewinder have gone under-reported lately. This post should bring you up to date!

Even as flow rates have stabilized, development and step out drilling are delivering excellent results. The Cheal-E1 step out well, which was placed on production last November, defined TAG’s newest producing oil site. The addition of Cheal E substantially extends the oil-saturated area of TAG’s Cheal field, and to date has produced about 90,000 bbls of oil. Current stabilized production is about 650 bbls/d of oil per day (455 bbls/d net), plus solution gas from three wells.

In the current 2015 fiscal year, TAG is slated to drill five more shallow development wells within the Cheal and Greater Cheal area. Four of these wells will be drilled with a 100% interest; one well drilled will be at a 70% interest in the new Cheal-E site acreage.

AtCheal South and Southern Cross, a 50-50 joint venture with East West Petroleum in a non-core operating area, TAG has already drilled four shallow exploration wells and one exploration side-track well. Three of them are being plugged and abandoned, while one, the Cheal-G1 well, is currently planned for production testing as a potential new discovery…we’ll keep you posted! 

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Over at Sidewinder, we have two exploration wells planned in the Sidewinder-B site, which target 3D seismically defined anomalies, which we interpret to be oil-prone prospects. Our exploration team has made the decision to focus this next round of wells on oil, based on the decline rates of Sidewinder’s gas wells. Again, we’ll let you know how things proceed. [Photo: Loading arm to fill Sidewider oil tanks.]

All of the seven wells mentioned here were identified from TAG’s proprietary 3D, and we consider five of them to be the lowest possible risk in our portfolio. So while we’re casting a bigger net to pull some higher-risk, higher-potential prospects into our drilling portfolio in FY 2015, our
low-risk shallow drilling strategy to fund our other activities remains in place.

Topics: Taranaki, Cheal-C site, Sidewinder Discovery

Oil and gas drilling and production brought to life

Posted by Denise della Santina on Apr 13, 2014 6:34:00 AM

We realize that we post a lot of pictures of our oil and gas permit sites here on the blog, and write press releases about our drilling process, the status of different exploration sites, production numbers, and estimated potential. Further, we talk a fair bit about how we use the safest, most environmentally conscious techniques, many of which we’re the first to bring to New Zealand.

But talking about it isn’t the same as showing it. 

So talented New Zealand video firm buildmedia recently put together a few videos that bring TAG Oil’s work to life. This first one is particularly exciting, as it shows TAG’s process from scoping to siting to drilling to production, all within the context of the actual landscape…above ground and below!

Over the next few weeks, we’ll release the other two videos, which you’ll also find posted to our website. Hopefully, you’ll enjoy and learn simultaneously. As buildmedia’s tagline says, “seeing is believing.”

How We Work

Topics: exploration well, Taranaki, New Zealand, oil and gas production, drilling

Our offshore rig sails by the window

Posted by Denise della Santina on Mar 25, 2014 1:23:00 PM

Here's a snapshot we took out of TAG Oil's New Plymouth board-room window yesterday. It's the Ensco-107 Jack-up rig we'll eventually be using to drill Kaheru, in transit, sitting off Port Taranaki.

The Kaheru is a prospect in shallow waters -- about 22 meters deep -- and just eight miles offshore, on the same thrust belt play fairway as several of Taranaki's successful oil and gas fields. 2D and 3D seismic show this to be an offshore extension of the producing, Miocene-aged discovery trend, and we're excited about the discovery potential of this prospect. Not to mention...how cool is this?

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Topics: Taranaki, offshore exploration, Kaheru

Reporting on the Cardiff-3 deep gas well

Posted by Denise della Santina on Feb 25, 2014 9:22:00 AM

TAG Oil set out to establish a strong foundation (both operationally and financially) on its Taranaki shallow oil and gas opportunities, and with 31 successful wells in just a few years, we're pretty happy with how that's gone. But those of you who have been with us for awhile, know that we've also had an eye on prospects with even greater potential, such as the East Coast Basin's unconventional oil, and the Taranaki Basin's deep Eocene-level oil and gas. 

In the current quarter, TAG successfully drilled, logged and cased its first deep Eocene well,Image 1 Cardiff-3, which went to 4,863 meters depth, and intersected 45 meters (148 feet) of potential pay in the successful Kapuni Sands Formation. (We say "successful" because the Kapuni is a proven, strong producer elsewhere in the Taranaki, and its discovery by BP Shell Todd launched a new energy era for New Zealand a few decades ago.) And in the hopes of launching the next era in New Zealand energy, we're prepping to test Cardiff-3 in the near future.

Our shallow drilling program is still intrinsic to TAG's short and long-term success, but the goal with deep drilling is to capture reserves many times larger than what's possible with shallow Miocene drilling. An independent assessment by Sproule International Limited (effective 7/31/13) estimated the undiscovered resource potential on the Cardiff prospect on a P50 basis at 160 billion cubic feet gas and 5.59 million barrels of natural gas liquids.*  Time will tell!

For past posts on the Cardiff deep gas well:

December 10, 2013, A quick update on Cardiff's deep gas / condensate well

November 15, 2013, Cardiff-3 Deep Gas Drilling: One zone at a time, so far so good...

October 25, 2013, 30-Days' Deep on Cardiff-3

September 19, 2013, Drilling Deep in the Taranaki Basin

** Footnote **

Sproule is a qualified reserves evaluator in accordance with NI 51-101 and the Canadian Oil and Gas Evaluations Handbook. Best Estimate is considered to be the best estimate of the in-place volumes that will actually be present. It is equally likely that the actual in-place volumes will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the in-place volumes will equal or exceed the best estimate.

Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources," the remainder as "unrecoverable."

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.  Prospective resources have both an associated chance of discovery and a chance of development.  There is no certainty that any portion of the resources will be discovered.  If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Topics: exploration well, Taranaki, Cardiff Deep Gas

Peanut butter & jelly, oil & gas, kids & dinosaurs

Posted by Denise della Santina on Feb 20, 2014 1:40:00 PM

Screen Shot 2014 02 19 at 3.16.47 PMSome combinations, like the ones in our title,  are tried and true classics. While others need a little extra encouragement.

So TAG Oil and its Kaheru joint venture partners Beach Energy and New Zealand Oil and Gas are harnessing kids’ love of dinosaurs – and their unlimited imaginations – to bring science to life outside of the classroom.

We’re in the business of fossil hunting, and we think there’s a great story to tell right under the feet of New Zealand’s kids that will ignite their interest in geology and the sciences in general.

So the JV is sponsoring “What Lives Down Under,” to teach and engage online and in a traveling roadshow. It’s fun for us to get in touch with our inner kid once in awhile, too.  

Topics: Taranaki, Announcements, New Zealand, oil and gas production

A view from the oil field

Posted by Denise Marshall on Jan 13, 2014 12:51:00 PM

The Cheal sites have been active these past few months, and we've finally gotten some photos in from the field. From Cheal A to G, we're making improvements, loading oil, and preparing to tie in more wells.

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To start with the wider view before going micro with the shots below, here's one that shows TAG living harmoniously with its bovine neighbors. 


A 400 bbl oil tank at the Cheal E site:
a second identical tank will be placed
beside it soon.


And over at the Cheal A site, oil tankers fill up with our product: a beautiful sight!


The five wells at the E-Site. The plant is permanently built, and two of the five wells are permanently tied in. Shows how low profile these sites are once we're producing.


Awaiting commission of the Thermal Combustion Chamber (hidden on the right), which will contain the flare at the E-Site.


 Breaking it all down at the Cheal E Site.

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A tidy G site with the G-1 well now underway.

Topics: Cheal Production Facility, Taranaki, Cheal Oil Field, oil and gas production

Protest leaflet gives TAG the opportunity to address misinformation

Posted by Denise della Santina on Jan 10, 2014 2:28:00 PM

A group protesting TAG Oil’s plans to explore for a potential new gas field near Mt. Taranaki recently distributed a leaflet with incorrect and misleading information that our team felt compelled to address. While we know that oil and gas exploration – and energy consumption in general – can be a very polarizing topic, we’re still disappointed that the protesters chose to inflame the conversation rather than to have an informed discussion.

The call to protest was made by Climate Justice Taranaki and Frack Free Kapiti and Beyond – which published a brochure, Don’t Frack With Our Mountain.

COO Drew Cadenhead said he was happy to speak with the protestors, but it was clear that they had no intention of engaging in a measured conversation. “We respect the right of people to protest, express their views and take an active part in the debate. However, we think any debate should be based on empirical science-based information. [This brochure] is a disservice to those that may rely on this information.”

While TAG doesn’t want to lend credence to inaccurate information, we do want to engage in a dialogue with concerned groups and the larger Taranaki community, in order to facilitate open communication and eliminate misinformation. Therefore, here is our rebuttal to some of the claims made in the leaflet about TAG’s plans to explore for gas in PEP 54873.


Claim one: Drilling will take place 220 metres off the park boundary.

Response: The drill site is in a farmer’s paddock within permit boundaries set by the New Zealand Government. A condition of the permit is that any drilling must stay inside the permit boundary: There will be no drilling into the National Park. The actual surface location is over 300m from the Park Boundary, the well will go almost straight down, nearly 5000m, and actually end up a little further from the Park Boundary at total depth than it is at the surface.

Claim two: TAG Oil has plans to develop a heavily industrialised worksite.

Response: “Heavily industrialised” is an exaggerated description of a site that, at its biggest, will be no bigger than any of the manufacturing and processing complexes in New Plymouth’s industrial park at Bell Block. The drilling pad is approximately 190m X 90m (1.7 hec) where we will drill one well to start with.

Claim three: Eight oil and gas wells will be drilled.

Response: Our consent allows us to drill up to eight wells, but only if the initial drilling and testing demonstrates the field might be commercially viable. If it is not commercially viable there will be no more drilling. We calculate our chance for success with this first well is about 30%. 

Claim four: Heavy vehicle movements and noise will become the new norm.

Response: Heavy vehicles will operate sporadically only during the mobilization and de-mobilization of the drilling rig – approximately two weeks on either end. Other than that, large truck movements on the roads around the wellsite would be less than is presently the situation with milk tankers, etc. in Taranaki. Furthermore, speed of trucks on the road to the well site will be limited to 30 kph. 

Claim five: Toxic chemicals will pollute groundwater beyond repair.

Response: This is a deliberately inflammatory statement that is not supported by any empirical scientific evidence. On the contrary, Taranaki Regional Council testing of water around all of TAG’s oil and gas sites last year found no trace of hydrocarbons in any water samples. Our consents for this site mainly deal with rainwater discharge from the site: No industrial liquids are discharged at the site, they are dealt with at an approved and consented facility.

Claim six: Contaminated waste will lay in pits, be pumped into deep injection wells or spread on land.

Response: Any rock cuttings or drilling fluid will only be disposed of in a manner approved in the conditions of our resource consent. Land farms are a proven safe and controlled way to use drilling mud and cuttings to rehabilitate marginal land. Some water may be pumped back into the well, and absolutely no contaminated water will lay in pits.

Claim seven: A large flare will burn from a pit; it will sound like jet engine overhead, light up the night sky and release dangerous pollutants into the clean mountain air.

Response:  If TAG makes a discovery we’ll want to sell the gas, not flare it. While a minor amount of gas may be flared for a short time as a safety measure, it would be flared into an approved enclosed container, not into an open pit—TAG Oil doesn’t use flare pits any longer as one way of reducing noise and waste. In regard to discharge, natural gas is regarded as the cleanest burning of all fossil fuels.

Claim eight: TAG Oil hopes to make use of this site for the next 30 years.

Response: If we find no gas we’ll use the site for a couple of months to drill the first test well, then reclaim the site. If we are fortunate enough to make a discovery, then it may provide gas and jobs and revenue for the country for many years. The potential benefits for the region and the nation are significant. During that time TAG will continue to manage its holdings responsibly, safely, following all regulations, and openly. And after gas exploration and any production are finished the site will be restored to how it was.

Claim nine: Decisions were made behind closed doors and without the knowledge of the Mountain Iwi and the wider community.

Response: On the contrary, New Zealand Petroleum and Minerals (the Government regulator) consulted with iwi late in 2012 about this permit before it was awarded to TAG. TAG has made numerous attempts to discuss the permit with iwi and hapu and will continue to do so.

Claim 10: TAG Oil operates only in New Zealand and recently raised $25 million and employed two US fracking experts in its evaluation of a 2,720,358 acre prospecting area.

Response: TAG Oil is listed on the Toronto Stock Exchange and has its head office in Vancouver, and yes, all of its operations are in New Zealand. To date TAG has spent approximately $250 million in New Zealand and has not taken a cent out of the country. And indeed, the $25m recently raised from investors who consider TAG to be a well-run company with strong prospects in New Zealand, will also be spent in New Zealand.

TAG recently employed two unconventional oil experts—one whose expertise is in environmental management. Both are to work out of TAG’s new East Coast office on the Company’s East Coast permits. Fracking may be required to release some of the oil and gas known to lie below the ground on the East Coast, however, it is too soon to know whether it can or will be used there. Regardless of the technique, TAG Oil will continue to operate responsibly and conscientiously.

Topics: Taranaki

A quick update on Cardiff's deep gas/condensate well

Posted by Denise della Santina on Dec 10, 2013 10:12:00 AM

To wrap up our excitement on drilling our first deep gas well...

Drilling of Cardiff-3, targeting the high-impact Kapuni formation is nearing completion. As reported, the early signs are positive and we'll be likely carrying out a full testing program over the next few months. We didn't want you to think that no news was anything but good news, it's just that photos from the lab and office are a little less exciting than photos from the field. 

The consent process for the Heatseeker well is now underway: By the end of this year we'll have drilled 13 production and exploratory wells, all adding to our future reserve potential and success.

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Topics: Taranaki, Kapuni gas/condensate, Cardiff Deep Gas

Ngati Ruanui kaumatua Ngapari Nui and TAG Oil sow the seeds of respect

Posted by Denise della Santina on Dec 6, 2013 12:28:00 PM

In early October we were delighted to sign a formal partnership agreement with Ngati Ruanui, whose traditional tribal lands extend from Hawera to Stratford, in the Taranaki. This was a high priority for TAG, and we worked diligently to get here, as it forms the foundation for a long, strong and mutually beneficial relationship for years to come.

Garth Johnson

The agreement is based on a number of critical guiding principles that recognize the aspirations of both TAG and Ngati Ruanui. As CEO Garth Johnson has said, “We

want many of the same things: to be economically successful but never to the detriment of high environmental standards.” One practical example is Ngati Ruanui’s environmental team having archaeological oversight and monitoring rights for any earthworks TAG carries out in the region.

Again, Garth Johnson: “This agreement is based on mutual trust, respect, and quality of life. To me, it means we have each others’ backs.”

Topics: Taranaki, Announcements

Cheal-E individual well testing underway

Posted by Denise della Santina on Nov 18, 2013 9:41:00 AM

Cheal-E continues to provide good news, with three wells cased as potential oil wells – one of which is being flow tested – and Cheal-E 4 now drilling ahead.

Image 4To ensure more reliable production forecasting on future wells, we’re following a protocol of initially testing each well individually: with each flowing for approximately 15 days, and then shut in temporarily to conduct pressure and temperature analysis. During this shut-in period, the next well will be placed on a 15-day production test until all new wells at the site have been individually tested and build-up analysis completed.

During its initial 5-day flush period Cheal-E1 was testing at 600 BOEs a day, about 90% of that oil, flowing naturally without the aid of artificial lift. We know that will settle down to a more typical Mt. Messenger well average over the course of the next year, but considering the fact that Cheal E represents a substantial extension of our known oil saturation area at Cheal, we’re fully pleased with the results, and happy to be getting the proceeds from the sale of all that oil.

Topics: Mt. Messenger, Taranaki, Cheal Oil Field, drilling