Back in the 1970s, some of the world’s richest oilmen came prowling the coast of New Zealand. According to popular rumour and conspiracy theory they struck it big, but chose not to tell the NZ Government. Now the official documents have been released, and they confirm the Great South Basin is one of the biggest unexplored conventional oilfields in the world. IAN WISHART has more

Once upon a time, in the tradition of all the best legends, there was a land that we now call New Zealand. Only, back then, it didn’t have a name and it looked and sounded very, very different from the way it currently does. A land of lush jungles and grasslands, peppered by volcanoes but no Southern Alps, ancient New Zealand was also much bigger than the current version.
Residents of modern New Plymouth, for example, who currently step off the footpath virtually into the sea, would have faced a long walk to the beach back then – something in the region of 140 kilometres further west. It was a dangerous walk, Jurassic Park-style velociraptors lurked behind pretty much every second bush, and dragonflies practically the size of small dogs would have made the journey interesting as well.
When they finally reached the coast, our travelers would have crested the ridge to see a sweeping delta, with herds of dinosaurs on the plains and a massive river winding like a silvery ribbon through the deceptively tranquil-seeming countryside.
Something happened, however, not just in New Zealand but around the world, and not only did the Age of Dinosaurs come to an end but so to did the layout of the planet as we currently know it. Land was swallowed by the sea, never to emerge again, taking with it the animals and vegetation.
Cut forward 60-odd million years, and a boat carrying a gaggle of kiwi oil geologists is heaving in the swells rolling in across the Tasman sea; their instruments and seismic gear tell them they’re several hundred metres above the dinosaur delta.
And where the ancient river carried debris and silt to an ancient sea, there’s buried treasure, they tell themselves.
One of those expressing excitement is Chris Uruski, a geoscientist at New Zealand’s Crown research institute, Geological and Nuclear Sciences. Uruski has been studying the figures, and reckons the Taranaki Basin oilfields are similar to those of Australia’s Gippsland Basin, off the Victorian coast.
“Both basins,” Uruski told a petroleum conference in Melbourne four years ago, “were formed in similar climates about 100 million years ago, occupy the same latitude, and are mostly offshore. But the important feature they shared was a large delta – where ancient river systems and the sea met millions of years ago.”
Prime conditions, he added, for the presence of huge volumes of oil. “We estimate that the Deepwater Taranaki Basin may contain as much as 20 billion barrels of trapped oil.”
If 50% of that trapped oil can be found, he says, maybe half of that again, “perhaps five billion barrels, may be produced from that basin.”
What’s that worth in today’s petro-dollars? The correct answer is another question: “How many zeroes would you like on the end of that cheque?”
Many oil industry pundits now believe we’ve reached “Peak Oil”, the point where most of the easily accessible black gold, Texas tea – call it what you will – has already been discovered and extracted.
With the massively populated China and India now demanding Western-sized oil deliveries, there’s increasing pressure on prices at the pump worldwide as demand outstrips supply.
All of which makes frontierlands like New Zealand suddenly flavour of the month in boardrooms across Texas, New York and Europe. We may not have the “bubbling crude” of Jed Clampett and the Beverley Hillbillies fame that seeped up out of the ground, but we have submerged oilfields that would make Rockefeller weep.
How much would five billion barrels in the Taranaki Basin be worth? On today’s rates, somewhere just under the half-trillion dollar mark. By the time the wells are drilled, the rigs are in place and the stuff is refined, petrol prices might well have doubled.
Which is why the opening up of the mythical Great South Basin, off the Southland coast, this year, is creating so much excitement. In the words of Uruski, while Taranaki is potentially huge, the South may yield three times as much crude.
“The Great South Basin probably has larger potential,” he told Explorer magazine last year, “so we’re talking perhaps of 15 billion barrels”.
For those old enough to remember, the legend of the Great South Basin began in the early 1969 when Hunt Petroleum, founded by Texas oil billionaire H L Hunt, came knocking on New Zealand’s door, looking for oilfields away from the Middle East.
The TV series Dallas was based on the lives of Hunt and his children, and in fact the scriptwriters had to leave out much of the wilder exploits because no one in TV-land would have believed them.
“During the initial years of exploration activity, 1970-73, several phases of seismic shooting were undertaken,” notes an official evaluation released on the Crown Minerals website just before Christmas.
International pressures from the first OPEC oil shock in 1973 stepped up the pace – the Hunt firm had been stung in Libya when its assets were nationalized by Colonel Muammar al-Qaddafi in 1972. Drilling began in the Great South Basin in 1976, and was big news for a while in lil’ ol’ New Zealand.
“It started back with Hunt Petroleum of course,” says Invercargill Mayor Tim Shadbolt, “the biggest Texas oil company in the world, a family company, and they came down here in the late 70s early 80s and drilled a series of about eight bores. But they did find oil, and there’s all sorts of people like that fellow Todd – he’s an auctioneer down here – he’s got a little canister of oil. Bill Todd, he’s got a canister of oil that he proudly shows everyone, beautiful oil – it’s not black crude, its golden oil, a bit like the old Singer sewing machine oil we used to have when I was a kid. Very fine, looks like you could almost put it into a diesel car and run it.”
How much oil? In a 1981 appraisal for the NZ Government, the oil exploration consortium reported, “The Great South Basin has the potential to contain up to 10 billion barrels of recoverable oil.”
Twenty five years later, in March 2006, the Government carried out fresh seismic surveys and, as NZPA reported, found signs that the Great South Basin was “far larger and more extensive than previously thought”.
For officials to be estimating a 15 billion barrel yield, that could mean potential reserves of up to 40 billion barrels. Add that to Taranaki’s 20 billion, and you’re getting close to the Iraqi total of 80 billion. Admittedly, both Iraq (surprisingly) and New Zealand remain underexplored. Only 2000 wells have been drilled in Iraq, whereas 1 million were sunk into Texas, and New Zealand has 360 abandoned oil and gas wells, according to GNS figures.
Of course, there are vast differences in the Iraqi and New Zealand oilfields. It is one thing to sink a hole in the desert and simply start pumping. It is entirely another to send a drill bit 1.2 kilometres below the surface of the Southern Ocean, and then to drill for another kilometre or two through rock, all the while being pounded on the surface by the Roaring 40s and the massive swells of the frigid south.
“No, it wasn’t easy going for them,” says Shadbolt of the Hunt venture in the seventies, “because the theory was that in the Southern Ocean there wouldn’t be waves bigger than 10m or something, and there were waves of 15m coming in. So poor old Penrod 78 [the drilling rig], which was huge for its day, got smashed to pieces and had to retreat up to Stewart Island, so it was pretty hard going for them. At least we established that we need the really big rigs to have a chance down here.”
And therein lies part of the problem. With oil exploration surging as the big companies strive to find replacement fields before the cheap stuff runs out, getting a major drilling rig to come down to New Zealand is nigh on impossible, as Crown Minerals group manager Adam Feeley explained on National Radio last year.
“The biggest problem though , is actually just finding drilling rigs…in some cases you can’t get access to a rig at any cost – at least, not for 18 months. Right now, the demand for rigs is outstripping supply.”
It wasn’t just a damaged oil rig that prevented the Hunt brothers from taking advantage of the Great South Basin back in the 1980s, however. The impact of the oil shock had led them to diversify away from oil:
“But the [Hunt] sons took over, and they came up with a cunning plan,” remembers Mayor Tim Shadbolt. “They thought that if they could get one product or one resource, and have the world monopoly on it, then they would be the richest family in the world, instead of the richest family in Texas. So they looked at diamonds and various other options, and eventually they came up with silver. They decided to give the world a monopoly on silver, and therefore they would control the price and therefore they’d be multi-multi multibillionaires. And the cunning plan worked for a while. They bought up all the shares in silver mines, silver outlets and silver distributors, and once they got control – I don’t think they had total, but I think they had around 90% – of the world re sources, then they started jacking the price up of course.”
They began their little adventure in 1973, when silver was just US$1.95 an ounce. In early 1979, at the peak of their NZ oil drilling, they’d pushed the silver price up to US$5, but in 1980 it exploded, topping out at US$49.45 an ounce.
“Of course there is always a flipside,” chuckles Shadbolt, “and the flipside was that all the users got together, with the shock of the price increases, and the biggest user of silver in the world at that time was the photography industry. Silver was part of the processing of photos, so they got a lot of scientific boffins and worked out a way to recycle the silver that is used in the photographic process. So overnight, the Hunts lost their main customer, and the second thing that happened of course was the American stock exchange, which worked out that this was happening and it was not a good thing for competition, and it started bringing in all kinds of regulations to close them down. Or at least make them pay. So overnight, they went from being multi-multi-multi-billionaires to being in not quite such good shape, and they fire sold a lot of their properties in New York.”
The losses for the Hunts kept mounting, and by 1987 had hit US$2.5 billion against assets of only $1.5 billion. The oldest son, Nelson Bunker Hunt, declared bankruptcy in 1988.
The Hunts had bailed from New Zealand in the early 1980s, even though they struck oil, and lots of it, on the sly. It was a confusing picture for a while, because the National Government of Rob Muldoon had declared that nothing of note was found in the Great South Basin. Yet despite that declaration and the disappearance of the Hunts, rumours grew. A young Radio Hauraki news journalist, later to become a magazine editor, was contacted in 1984 by an oil worker who claimed to have worked on the Hunt exploration when they struck big oil.
“They simply cemented it up, put a cap on it, and sailed away. We were all sworn to silence,” he added, “but don’t let them tell you there’s nothing there. It’s a huge field!”
In his recent book, “The Lost Oilfields of New Zealand”, Southland author and former oil worker Brian Jackson recounts a similar story, saying workers on the Hunt rig were locked inside when they unexpectedly hit an undersea “gusher”, 50 or 60km east of Stewart Island.
Jackson claims the Hunts didn’t want New Zealanders to see the oil or get a bearing on the location.
“The anchors were pulled and the rig was put under way,” he told journalists at the time of his book launch, and “when it had moved away from the oil slick, the New Zealand crew members were unlocked.”
Tim Shadbolt, who can see the boomtimes for his region if this all comes off, has met Jackson to discuss the Great South Basin.
“I’ve met with him, and he has got all sorts of theories about how [the Hunts] deliberately left, how they stalled the government – they’re supposed to have a government engineer with them every time they are drilling, and on this day they deliberately gave him the wrong time to meet at the wharf. So he didn’t get there, and that was the day they had the gusher that they supposedly cemented up. It could all be true, and none of it could be true. Oil is like gold, it creates this huge emotional drama for everyone involved. New Zealanders are great gossips.
“The rumour is,” adds Shadbolt conspiratorially, “that one of the basements in these properties in New York [sold by the Hunts] contained all the South Sea oil basin research and seismic information – it sounds ludicrous, but it is a bit like grandma dying and the kids, who are not that interested, throwing out all her Queen Anne furniture into a rubbish skip or something.
“There is no doubt at all, that it is the biggest unexplored oil-field in the world – or virtually unexplored – but we all know there is oil down there and it is very good quality oil, so it is definitely going to happen.”
But at what price? Apart from losing the shirts off their back in their ill-fated silver venture, another reason the Hunts apparently upped stakes was because of a royalty spat with the New Zealand Government, which wanted the standard OPEC rate of around 20%. In today’s dollar terms, assuming 15 billion barrels at US$60 each, that’s a total field value of NZ$1.3 trillion. Twenty percent of that would be a cool $260 billion for the NZ economy, and that’s not including the money spent on infrastructure and bases in Southland.
But while the citizens of Southland will enjoy the economic trickledown, the revenue for New Zealand overall won’t be anywhere near $260 billion, because the Government is asking for royalties of only a quarter of that.
Tim Shadbolt sympathises with those who claim it’s a sellout, but says they’re ignoring reality.
“I’ve been to several meetings with people who were involved at the time [of the Hunt exploration], and had several meetings in my office with key players, and down here the general consensus seems to be that Muldoon was playing hardball with these guys and wasn’t happy with the percentage shares. They felt that because the conditions were so rough that the government should be getting less, and that’s why – when they pulled out – Muldoon didn’t want to sort of lose face and admit that he mucked up, so he tended to emphasise that no one knew. And he was right, I mean, you can’t say whether there is significant oil there or not, after drilling only eight holes. Nobody knows – to me, that is the reality. It is basically an unexplored field.
“Because of the conditions, it would be like North Sea oil, it would be the toughest conditions in the world to actually work in. They say, in round figures, that it’s around $1 million a day to keep a big offshore rig drilling. So there is a huge risk factor in there, and I think that is why the present government is accepting a lower royalty percentage, whereas Muldoon was holding out for 20 or so per cent the usual rate.”
But there are other jewels up for the finding in the Basin. Natural gas reserves are now estimated to be ten trillion cubic feet, or around three times larger than the Maui gas fields that supplied New Zealand for decades. The Government is hoping the combined oil and gas yields will lure Seven Sisters companies like Royal Dutch Shell or Exxon Mobil – major players with the financial grunt and big rigs at their fingertips. There’s even speculation Hunt Petroleum might come back – according to one Investigate source the company has been sniffing around for land near Bluff and making other inquiries with local industry.
Some oil industry veterans are privately voicing the prospect that the Taranaki and Great South Basin finds could be enough to catapult New Zealand into OPEC, the oil production cartel.
Others, however, argue that while we may have the resources, New Zealand currently still doesn’t have a high enough profile on the world stage. There is, GNS scientist Chris Uruski told Explorer magazine, “A perception that New Zealand is gas prone”. It is oil that is sexy, not gas.
“Explorers have told me…New Zealand is much too nice a place to find oil! Really, it is not proximal to anything much, apart from Australia and Antarctica, which also have small populations.
Our remoteness is a definite disincentive, particularly for those who still think they are in danger of finding gas here.
“The main barriers to exploration are financial and will,” he argues. “So far, explorers have played it fairly safe. Generally, exploration companies like to expand exploration efforts incrementally from land to shallow waters, further offshore, gradually getting deeper. New Zealand’s potential lies mostly in deep water, so it needs someone with deep pockets to take the plunge.”
Still, with oil prices hitting record highs last year and fewer new fields being discovered, Uruski believes New Zealand’s time has come. The only alternative for the major oil companies at the moment is the even more expensive option of extracting oil from shales and other rocks in North America and Venezuela. The two-largest known oil reserves in the world are locked up in those shales, around three to four trillion barrels of oil. But the technology involved in extracting oil from rock is a whole lot more expensive than deepwater drilling for underground oil lakes.
In the meantime, Invercargill is gearing up for the boom.
“The tenders will be closed on second of April,” says Shadbolt. “We had a meeting in Invercargill last night of various companies that are involved in the oil industry, and we asked guest speakers from local companies like L. and M. Mining – who have been doing a lot of testing in the area – Crown Minerals sent a spokesman as well, and they have said yes, there is a significant interest from the main players, the big companies, who have uplifted all the data that they have available. They will be in negotiations with the companies who have tendered, and it will be announced in August who has got them.
“From council’s point of view, we just want to make sure that the oil companies are very aware of how many good engineers we have got down here, and try and make sure that once again we become the centre for the testing that is done. So we have set up a website,, and it lists everything that you would need for oil exploration.
“We are also running a series of workshops, just to let local businesses know what oil companies are like, how they operate, what their expectations are. For example, they run 24/7 all year, there is no such thing as after hours or anything like that when you are dealing with the oil industry. They are insistent that everything has to be – if you say you are going to do something it has to be done, because it is such an intense operation and such an expensive project to do.”
Is Southland ready to be the new Emirates?
“They are already calling me Sheikh Shadbolt down here, they are teasing me. But oil does seem to flow in the most adverse environmental conditions. It is either deserts or the most ferocious oceans imaginable, but nobody knows, at the end of the day, no one can say for certain what’s down there. All we know is, it definitely is oil.
“The mood of the city is quite excited actually,” continues Shadbolt, “and although you don’t get a huge benefit compared with the wealth generated, you certainly get the guys on rest and recreation with big wages – they come into town with big excitement, so it’s almost buzzing. And we are on a bit of a roll anyway at the moment, everything we touch seems to work out really well, so there seems to be quite a lot of interest all right.
“Every time a big block of land now gets sold around Bluff or the coast down there, it immediately unleashes a wave of speculation, “oh, that’s Shell, Shell’s bought that!” I just take everything with a grain of salt, it is possible, you don’t know because they do it through agents, and we have tried to track down who is behind some of these things, it is possible but we just don’t know.”
And that, in a nutshell, sums up the mystery of oil: until you strike a gusher, you really just don’t know.