NZ:Oil strike on East Coast of more than 12 bln barrels

The company said in Vancouver on Wednesday that AJM Petroleum Consultants had made an assessment of the company's fractured oil-shale in its 100 percent-owned 890,000 hectare prospect in the East Coast Basin.

It estimated the oil available from just 10 percent of the area was 12.6 billion barrels.

By comparison, on the other side of the North Island, the Australian Worldwide Exploration (AWE) company's Tui field is estimated to hold the equivalent of 50 million barrels.

Trans-Orient chief executive Garth Johnson said the consultant's advice confirmed its interpretation that the onshore East Coast Basin "is highly prospective for a fractured oil shale play".

"We were originally attracted to the East Coast basin of New Zealand by the hundreds of active oil and gas seeps naturally occurring on our lands," he said.

"We've tested a number of these seeps and geochemically confirmed the sweet, light (500API) crude oil is being generated from these two world class source rocks," he said.

Trans-Orient has two onshore permit areas in the basin covering about 8750 square kilometres.

One is north of Gisborne and the other is mostly south of Napier and Hastings. Both permit areas have coastal boundaries.

According to Wellington oil exploration consultant Mac Beggs fractured source rock has proved quite successful in North America over the last few years, adding quite substantial reserves.

The rock lacked the permeability for oil to flow, and had only become viable because of extraction technology breakthroughs.

Trans-Orient executive chairman Dave Bennett has previously predicted that the company's prospects in the basin could hold as much as 1.7 billion barrels of oil in place.

Trans-Orient has also planned to investigate commercialisation of two shallow producing features in the northern permit area, at Te Puia Springs, south of Ruatoria, where seeping oil has previously been used to heat a hospital.

Wednesday, Johnson said that, based on well log data, core pyrolysis, and field measurement of outcrop and oil and gas seep locations the best estimate was for 12.6 billion barrels of hydrocarbons for both the Waipawa and Whangai shales.

"There have been a number of modern wells drilled in the East Coast Basin targeting conventional exploration prospects, but Trans-Orient will be a first mover in the Basin to leverage North American knowledge and technology to test the unconventional potential of these fractured oil shales in New Zealand," he said.

The estimate of "original oil in place" at 12.6 billion barrels was based on less than 10 percent of its lands.

"We feel there is tremendous upside potential to both the conventional prospects and the unconventional fractured oil shales within our permits."

The AJM Petroleum report has also been filed with the British Columbia Securities Commission.