Wellington, July 19 NZPA - Hopes of finding more hydrocarbons near the Tui oil fields offshore from Taranaki have been dashed for a second time.

Operator AWE today said no significant hydrocarbons had been found within the target sandstone reservoirs at the Kahu-1 exploration well, about 3km east of the producing Tui fields. Plug and abandonment operations were starting at Kahu-1.

It is the second piece of bad news from the Tui area in the past five weeks, with the Tui SW-2 well failing to find a commercially significant oil accumulation last month.

AWE has a 42.5 percent share in the wells, with Mitsui E&P Australia having 35 percent, New Zealand Oil & Gas (NZOG) 12.5 percent, and Pan Pacific Petroleum 10 percent.

The lack of success at the two Tui wells adds to a disappointing period of exploration for NZX-listed NZOG, whose shares were down 4c to $1.21 around mid-afternoon.

In April the Hoki-1 well drilled in deep water 135km west of New Plymouth was reported to have found no significant hydrocarbon indications. NZOG had a 10 percent stake in that well, while AWE had 50 percent.

Releasing half year results in February, NZOG had described Hoki-1 as a relatively high risk prospect targeting a potentially large oil structure. It was further from shore than any previous offshore Taranaki well, in water depth of more than 300m.

Drilling at Tui was said to be of a different nature, with at least half a dozen potential drilling targets around the existing oil fields. The location of the two wells was chosen following considerable resources being devoted to evaluating various possibilities.

When operations at Kahu were finished, the Kan Tan IV drilling rig would be released to the joint venture drilling the Tuatara-1 exploration well, NZOG said.

Tuatara-1, in about 50m of water, is in the Taranaki Basin at the northern end of the South Island about 15km from the coast and 30km from Nelson.

AWE has a 65 percent stake in the project, with Roc Oil at 15 percent, Kea Petroleum at 10 percent and Carnarvon Petroleum at 10 percent.

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