Australia is not the only land down under that is endowed with natural resources, as the oil and gas industry moves to explore and develop promising areas in New Zealand in an attempt to supply future energy needs.

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Natural Gas Fields Started Up In The 1960s and 1970s
Royal Dutch Shell
(NYSE:RDS.B) is the most established major oil company currently producing in New Zealand, with production from the Kapuni and Maui natural gas fields that were started up in the 1960s and 1970s. The Pohokura natural gas field was the most recent startup and began production in 2006.
The New Zealand government is actively leasing exploration areas to oil companies and holding lease auctions on a regular basis. Two are scheduled to close in 2010.

Exxon Mobil (NYSE:XOM) was awarded a block in the Great South Basin in a 2006 auction. This basin is located offshore, and eight exploratory wells were drilled here in the 1970s and 1980s, with four finding hydrocarbons.

Exxon Mobil has completed seismic work and is currently seeking equity partners to take part of its 90% interest in this block.

Massive Natural Gas Project in Australia
Exxon Mobil and Royal Dutch Shell are also involved with a massive natural gas project in Australia that is being operated by Chevron (NYSE:CVX). The Gorgon Project is set to cost $43 billion AUD and will consist of three Liquefied Natural Gas (LNG) facilities, a domestic gas plant and a carbon dioxide plant. The field contains an estimated 40 trillion cubic feet of natural gas.

Among the independent U.S.-based exploration and production companies, Pogo Producing Co. was awarded several blocks in New Zealand and was set to spud a well in early 2007. Plains Exploration and Production (NYSE:PXP) purchased Pogo Producing in late 2007, and the company does not mention any exploration or properties in New Zealand in its marketing literature.

Both Conventional And Unconventional Resources
The area has both conventional and unconventional resources present, with shallow Miocene sands that are prospective and two deeper oil-bearing shale formations called the Waipawa and Whangai Shales. TransOrient believes the two shales are comparable to the Bakken Shale in North Dakota, although much more study will be needed before its potential is known.

A private company called Energy Company of America also has interests in New Zealand, with some acreage near TransOrient in the East Coast Basin. That company drilled the Kauhauroa 1 in 1998 and reported production of 11.5 million cubic feet per day of natural gas. The company redrilled the prospect in 2007, but the results have not been made public.

Energy Company of America is also exploring offshore and spud a well in late November 2009 in the Taranaki Basin. The company is leasing the Ensco 107 rig from Ensco International (NYSE:ESV) to target three separate zones in the basin.

Frontier Places Like New Zealand In The Industry's Future
If the world is ever to escape the predictions of disaster that many are forecasting as oil production peaks in the near future, then frontier places like New Zealand are where the industry should be putting some of its dollars. (To learn more, see our Oil And Gas Industry Primer.)

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