TAG Oil drilled an unprecedented 10 wells in the past year – seven of which are in production or still being tested.

And of the 30 shallow wells TAG has drilled in recent years, 25 have produced oil and gas – key results in an industry where the average commercial success rate is just one in 10.

Since 2002 the TSX-listed company has invested $300 million in New Zealand and has paid the Crown nearly $40 million in taxes and royalties. It owns two producing oil and gas fields in Taranaki – Cheal and Sidewinder – and a suite of exploration licences throughout the country, including in the frontier East Coast Basin where its first well has also delivered encouraging oil and gas shows.

TAG has built a strong reserves position; if it was to stop drilling today it would still be able to produce oil and gas for another 10 to 15 years. In addition to this, the company has great prospectivity in its permits, a strong balance sheet and a resilient financial position with no debt.

TAG delivered a record year with oil and gas revenue up 29 per cent to CAD $57.6 million compared with CAD $44.6 million in fiscal year 2013

Cheal expansion; increasing production

The Cheal A expansion - a major infrastructure expansion project - was completed and commissioned in early 2014. It involved the expansion of oil processing capacity and storage, the installation of 11 kilometres of pipeline, construction of a gas production plant, and installation of gas-fired electricity generation on site. The project, which cost $50 million, was completed on time and within budget.

The expansion has facilitated several improvements including using produced gas as a refrigerant to generate electricity, thereby maximising the investment.

The plant has enabled increased production from Cheal A, B and C. It also has sufficient capacity to process all current and future oil and gas production from the Cheal permits, including any commercial quantities of gas produced from the Cardiff deep play.

At the Cheal E site, where TAG is partnered with East West Petroleum, the first of five wells was so successful the JV partners immediately built a permanent production facility. The plant, a mini version of replicates the Cheal A production station, and was online within two months. It was then tied in to the other four wells from the programme.


TAG is leading the unconventional exploration in the East Coast Basin. Independent assessments of the permit areas estimate an undiscovered resource potential of approximately 14 billion barrels of oil. 

A well was drilled last year near Dannevirke to gain a better understanding of the hydrocarbon deposits contained in the formations. Ngapaeruru-1 in the Boar Hill permit, PEP 38349, came back with encouraging oil and gas shows and will be tested this year.

TAG is also carrying out deep gas exploration, and drilled a deep gas exploration well – Cardiff-3 - targeting the Cardiff prospect at Cheal in 2013. Significant hydrocarbon bearing zones were encountered and the testing of the well will continue.


TAG is the only profitable shallow reservoir explorer in New Zealand. This success is attributable to the company’s “will-do” attitude, the successful marriage of its North American technical expertise with its New Zealand geological experience, and its determination to innovate.

In the past year the firm has trialled a combination of electric submersible pumps, insulated tubing and rod pumps to maintain oil fluidity, improve production rates and make production more cost-effective.

It has also been working with regulators to explore the introduction of high grade plastic piping to transport oil and gas rather than traditional heavy steel pipe.

Other work with regulators included the development of a more flexible testing regime for equipment operating under high pressure. Applying risk assessment tools not previously used in New Zealand meant TAG was able to demonstrate a safe alternative and have inspections reduced from yearly to three-yearly.

Drilling of Cardiff-3 provided another first for New Zealand, with TAG being the first company to use a water-based drilling mud – rather than a synthetic product - to drill a deep well.

Stakeholder engagement

Stakeholder engagement has also been key to the company’s success. TAG considers consenting to be its biggest challenge, and credits the time and energy it spends talking to and working with landowners and neighbours as the reason for its high success rate in negotiating land access agreements, and gaining drilling consents.

In October 2013 TAG signed a formal partnership agreement with Ngati Ruanui, which confirms shared principles for work carried out by TAG in Ngati Ruanui’s rohe. Cheal, Sidewinder and Southern Cross all fall within the iwi’s rohe.

The Overall Energy Company of the Year category is sponsored by Port Taranaki