Yet another plank of John Key's “rockstar economy” falls away
TAG Oil's East Coast programme has gone from dawn to dusk thanks to the plummeting price of oil.
Plummeting oil prices have seen TAG Oil give notice it will formally relinquish its remaining Hawke's Bay exploration permit.
Billions of barrels of oil were estimated in TAG's East Coast exploration areas but with no partner forthcoming to share a costly drilling programme and the wholesale global price of oil one third of the price two years ago, TAG has walked away.
Last year it surrendered its permit area near Gisborne and the latest permit area to be surrendered includes the drill sites at Boar Hill near Porangahau and Ngapaeruru-1 east of Dannevirke.
Tararua mayor Roly Ellis said the district had been looking forward to economic development should the drilling programme enable commercial quantities of oil, but some residents would be pleased to see TAG depart.
He said whether drilling resumed "all depends on the price of oil" but the district had other development possibilities.
"All sorts of things might happen in the next five to 10 years."
All well and seismic data collected by TAG must be submitted to government agency New Zealand Petroleum & Mineral, which will make it publicly available on its free database.
TAG will concentrate on proven Taranaki reserves.
The Canadian-owned and listed company operates only in New Zealand.
Notice it would drop the PEP 38349 exploration permit was announced in the company's third-quarter results.
Revenue from oil and gas sales fell by 11 per cent for the quarter ended December 31 to $5.1 million from $5.7 million for the previous quarter. The 11 per cent decrease was due to a 7 per cent decrease in oil prices and 6 per cent decrease in oil and gas volume sold.
TAG's surrendered permits, including the Waitangi Valley drill site near Gisborne, will be included in future government Block Offers.
The Waitangi well was abandoned in 2014 because of unprecedented high pressure reserves at shallow depths.
Australian and New Zealand company Mosman Oil & Gas currently holds an 883sq km exploration area that includes Dannevirke and Pahiatua.