OIL PRODUCTION

Otago Daily Times, Issue 23110, 9 February 1937, Page 10

OIL PRODUCTION

POSSIBILITIES IN NEW ZEALAND SEEPAGES AT KOTUKU A GEOPHYSICAL SURVEY STATEMENT BY MINISTER (Special to Daily Times) GHEYMOUTH, Feb. 8. While the Government is investigating the coal resources of the Dominion and the possibilities of the production of oil from coal it has hot lost sight of the likelihood of finding a flow of oil in economically adequate quantities in New Zealand. This was stated by the Minister of Industries and Commerce (Mr D. G. Sullivan) in an interview at Greymouth.

To-day the Minister, with departmental geologists and geophysicists, visited oil seepages at Kotuku in the neighbourhood of which a geophysical survey will be made to determine whether the country is of the type where oil in economically payable quantities could reasonably be expected to exist. The visit to Kotuku was easily one of the most interesting phases of the Minister's tour of the northern provinces of the South Island. There are fairly extensive seepages of crude oil at Kotuku which have been exploited in a small way for many years, and even now one of the small seepage wells is giving as much as 40 gallons weekly for commercial use in a more or less crude form.

While there has been a good deal of boring in an attempt to find the parent oil bed none of this has been deep enough or, it is stated, done on scientifically thorough lines. The Department of Scientific and Industrial Research is assembling a modern plant for preliminary surveying on geophysical lines which, if reports are favourable, might lead to extensive boring should the Government agree to undertake further investigations after the survey. The Minister was keenly interested in the seepages and in the growing areas of silicate deposit which is being precipitated over the ground from water heavily impregnated with gas. This water is escaping under some pressure from old bores, and is salty and oily, smelling heavily of petroleum. The oil seepages occur below the terrace at the foot of which fine pink terraces are being formed by the silicate deposits. This silicate encrustates not only the ground but anything with which it comes in contact, and to such an extent that a waterwheel put up recently to be driven from this impregnated water is now heavily coated with a pink crust. The Minister also climbed to the top of the 120-foot tower which was erected over the boring plant worked some years ago by private enterprise. To-day Mr Sullivan also issued a summary of the reports on the oil question which has been prepared for him and the Minister of Mines (Mr P. C. Webb) by departmental experts. This report states: “ New Zealand uses about 70,000,000 gallons of petrol per annum, and it is not unlikely that this amount will increase.

“ It is generally accepted that the world resources of oil in relation to the demand are far from inexhaustible,” Mr Sullivan said, “and for several years in the United States of America there have been serious discussions as to the rate at which the natural flow of oil resources are being used up. It is true that by using the hydrogenated method instead of distillation there is a large yield of petrol from crude oil, while it is not improbable that the increased use of Diesel engines for transportation units will lead to greater efficiency in the use of the oil. Nevertheless, the general situation is such that before many years New Zealand will have to consider seriously the production within New Zealand of liquid fuel apart from the question of the possible increased use of producer gas. “ There are four main possibilities —first, the production of benzol as a by-product of the gas works, although even if all the main works were to arrange for this the annual rroduction would not be more than fioo.ooo gallons, which is less than \ per cent, of the requirements. “ Secondly, there is the production rf oil from coal by hydrogenation or by the German Fischer process. The smallest economic units in such plants are of the order of 45,000,000 gallons and 9,000,000 gallons respectively, but the capital cost is large, he' ween £11,000,000 and £12.000,000 (N.Z.) in the former case. The production cost is approximately I4d per gallon in both cases, including interest, depreciation, maintenance, coal and working costs. The production cost at the factory is two and a-half times the present landed cost of petrol, for it must be remembered that the Customs duty is over lOd and the storage and distribution costs are high. Moreover, the production of oil from coal is still in the experimental stage, and with such a large capital expenditure involved it mav be wise to wait, as indicated by th° Minister of Mines, until the design of the plant is more stable from the point of view of probable early improvements, and there is the possibility of smaller size results being evolved. “A third method of producing liquid fuel in New Zealand would be the production of alcohol from farm crops, such as potatoes, artichokes, maize, etc. This method is likewise costly. The production costs have been of the same order as petrol from coal, and the product would be suitable only for blending. Obviously, however, if ore can be found in the earth in New Zealand none of the above methods will be economical, and it is therefore presumably obviouslv worth while to settle the possibilities of the earth ore or the flow of oil before large capital costs are involved in the production of liquid fuel by other means.

“ It has long been appreciated that there are in many parts of New Zealand various strata which are known from experience in other parts of the world to produce oil. Oil is produced in old marine beds from the decomposition of small shell fish and forams, and provided there is a cap of rock to prevent its escape to the surface and a suitable structure to hold it, such as a saucer-shaped structure or, as in Mexico, beds which are altered in shape and inclination by old volcanic intrusive rocks, oil can be tapped if the highest parts of such sub-surface structures can be located. It is known that both these types of structures are probably present in New Zealand. The question is whether

saucer rocks are of sufficient thickness and accompanied by suitable reservoir rocks such as sands, and whether the structures have been tapped by earthquake action. It is far from correct to assume that because oil has not already been found in New Zealand modern technique geology will not succeed in finding oil in the future. There are many reasons for this. The main one is that we are only now beginning to understand sufficient of the structural geology in New Zealand, while geophysical methods such as have been applied‘with fair success elsewhere, iri America and Russia in particular, are only now being developed to a point of real usefulness. "Already valuable information has been gathered by preliminary trials at a few points in New Zealand to indicate that the work may well be worth pursuing. Fuither experiments are to be tried near Kotuku. where there are interesting oil seepages. It is needless to emphasise the importance to New Zealand if a (low of oil can be found. The oil industry is the greatest romance of the present world generation, and the by-products find as great an industrial use and employment as oil itself.”