New Zealand's East Coast basin is "literally leaking oil and gas" and provides potential for thousands of wells, an oil company with exploration permits in the area says.
New Zealand's main oil and gas producing region is at Taranaki on the west coast of the North Island but Tag Oil, New Zealand-based exploration company, says the East Coast basin on the other side of the North Island has "world class upside potential".
A presentation by the small Canadian-based company on its website says it has identified widespread oil and gas seeps over a large area.
The presentation says the "East Coast basin is literally leaking oil and gas" and billions of barrels of oil could be recovered from the basin.
The Sunday Star Times newspaper reported that the company regarded the East Coast as a "Texas of the south" and wanted to pursue an aggressive program there.
"It's a relatively high risk play. In exploration in general, we have a 10-20% chance of success, so there's an 80-90% chance we're not (going to) find anything with those first four wells and we may be done over there," said Tag Oil CEO Drew Cadenhead.
Tag Oil has acquired almost 700,000 hectares of land in the East Coast Basin, with the company saying it has only assessed 90,000 hectares.
Last September the company said it was undertaking seismic testing in the region, with first exploration drilling planned after that.
Early results from testing show an estimated 12.6 billion barrels of oil could be collected.
The region is seen as having potential for so-called shale oil extracted from rock.
"We're (going to) drill four wells over there this year and then depending on how those go maybe a few more the next year and a few more the next year," Cadenhead told ONE News.
And in the next 10 or 20 years, yes we may have 1000 wells if it goes great over there, but they're certainly not all (going to) happen in the next year."
Tag Oil has also told north American investors that the area is leaking with oil and gas and has the potential for thousands of wells.
The company has a farmout deal with Apache for the region, under which Apache may spend up to $126 million ($US100 million) to earn up to half of Tag's present 100% share of exploration prospects.
But there are likely to be few benefits for those living in the area.
"The oil company have conceded that there will be very little employment opportunities if any for local people - it's very hard to see that there will be an economic spin off and we know there will be an environmental cost," said Green MP David Clendon.
There's also concern about the impact on the largely untouched landscape.
"They'll be using the most aggressive, most environmentally dangerous and damaging techniques to extract that oil. It's particularly around water pollution and damage to soil that we'll see the results with this," said Clendon.
Labour's Energy spokesperson and East Coast-based MP Moana Mackey questions the impact on local communities.
"As a Gisborne-based MP, I know how concerned communities up and down the East Coast are about any expansion of oil and gas exploration in our backyard, in particular the impact on our environment and our tourism industry.
And who pays if something goes wrong?"
"This is not where New Zealand's economic future lies. We need to be investing instead in renewable solutions," said Mackey.
Mackey also questioned whether the controversial practice of
hydraulic fracturing or 'fracking' was part of Tag Oil's plans
for the East Coast.
"An increasing number of governments around the world are reviewing or banning fracking because of concerns about the safety of the practice and in particular the impact on drinking water supplies.
"Labour has been calling for an inquiry into the practice of fracking in New Zealand so that these concerns can be fully investigated."
- with AAP