Elemental Group has restructured to accommodate a significantly changed outlook in respect of the upstream petroleum sector in New Zealand.
Globally, the upstream (exploration and development) petroleum industry has been recovering strongly from a downturn triggered by oil over-supply and depressed prices between 2014 and 2017. Elemental Group maintained and strengthened its capabilities through the downturn, while also growing its business in both the Power & Renewables and Environment consultancies. Elemental and our clients are now reaping the benefits of having maintained its exploration capabilities, being deployed on several pending drilling and development projects in Taranaki.
In 2016, Elemental’s Geoscience practice was expanded through the appointment of Dr Mac Beggs as senior exploration consultant. The team has since provided exploration geoscience services to both established operators and potential new entrants to New Zealand.
In 2017, Elemental assisted a client with their successful offshore Taranaki application in the annual Block Offer. New Zealand Block Offer facilitation was established as a core business for Elemental. At the beginning of 2018, the outlook for the regular annual Block Offer was positive, with exploration budgets expanding, and a historic and diverting restructuring of the upstream industry in New Zealand largely falling into place. Elemental invested considerable effort to promote its advisory and technical capabilities in relation to the 2018 Block Offer in advance of its expected launch at the March 2018 New Zealand Petroleum Conference.
The unanticipated announcements by the Prime Minister and Energy & Resources Minister on 12 April fundamentally altered the business outlook for exploration advisory services in New Zealand, reducing the continental-scale smorgasbord of opportunities ranging from near-field plays in Taranaki Basin, across frontier basins with proven petroleum systems but unproven commerciality, to copious “blue sky” resources in gas hydrate along the East Coast and other continental margins, to just a tiny and already heavily developed theatre on the Taranaki peninsula. After several months adjusting to this highly restricted focus, the process and timetable for the promised 2018 Block Offer has not been clarified and is reportedly dependent on passage of amendments to the governing Crown Minerals Act 1991, which are reportedly required to render the April decisions legally compliant.
Accordingly, Elemental has lost confidence in the ability to grow its exploration consultancy in the near term, and effective 1 October 2018, is consolidating the personnel involved into its more operationally-focussed business with incumbent clients. Mac Beggs will remain associated with Elemental as a non-exclusive sub-contractor and exploration adviser.