Canterbury basin offers potential on South Island, New Zealand

All the sedimentary basins around South Island are underexplored, but none offers better upstream and downstream opportunities than the Canterbury basin (Fig. 1). The region has potential for onshore and shallow-water discoveries, and it contains the largest population centers on the South Island.

The Canterbury basin contains >5 km of Cretaceous-Cenozoic sediment1 and covers more than 40,000 sq km (Fig. 2). It extends east into deeper water of the Bounty Trough and is contiguous south with the much larger Great South basin.^{2 3}

Hydrocarbon exploration

The Canterbury basin has been explored for hydrocarbons onshore since 1914 and offshore since 1970, but only 10 exploration wells deeper than 500 m have been drilled.

Petroleum exploration began when Chertsey-1 was drilled (1914-21) to a depth of 660 m. Hydrocarbon traces were reported in the well but have never been confirmed. Most onshore wells were drilled between 1954 and 1978, including J.D. George-1 (1,650 m), Leeston-1 (2,741 m), and Kowai-1 (1,419 m), but no significant discoveries were made.

During the 1970s and 1980s, exploration interest turned offshore. Over 15,000 line km of seismic reflection data were acquired and four wells were drilled. Both Galleon-1 (3,086 m) and Clipper-1 (4,742 m) contained significant hydrocarbon shows in sandstones within Late Cretaceous coal measures.

Galleon-1 flowed 10 MMcfd of gas with 2,300 b/d of condensate but was plugged and abandoned due to the relatively small size of calculated total reserve.

Renewed industry and academic interest in the Canterbury basin the last few years has led to additional data acquisition, both onshore and offshore. Indo-Pacific Energy Ltd. and AMG Oil Ltd. drilled two onshore structural closures in 2000, testing sandstone and limestone reservoir targets at 1,000-2,000 m, but plugged and abandoned both wells.

The Minister of Energy has set aside most of the basin for a bidding round in 2002-03.

Basin geology

The tectonic evolution of the Canterbury basin can be divided into four phases: Permian to Jurassic convergent margin; mid-Cretaceous rifting; Late Cretaceous to Oligocene passive margin; and Miocene to Recent transcurrent tectonics.

During the first phase, voluminous clastic sediments were deposited and complexly folded in an accretionary convergent margin setting.4 Most of these rocks are considered "economic basement," but Jurassic coal measures have significant source rock potential.^{1 5}

Late Albian to earliest Campanian (informally referred to as mid-Cretaceous) normal faulting was responsible for creating the primary basin architecture. The greatest subsidence occurred in the Clipper subbasin, but widespread faulting created smaller grabens elsewhere (Fig. 2). Terrestrial conglomerate, sandstone, siltstone, carbonaceous mudstone, and coal were deposited in grabens.

The rifting episode was associated with final separation of New Zealand, Antarctica, and Australia during Gondwanaland break-up.1 2 6 Petroleum basins of southern Australia and the Taranaki basin were adjacent to Canterbury in mid-Cretaceous time (Fig. 3), with the result that all three regions have similar stratigraphy and petroleum systems.

Late Cretaceous passive subsidence followed rifting, resulting in transgression towards the northwest. This resulted in a first order fining-upward sequence with terrestrial conglomerate, carbonaceous sandstone, siltstone, coal, and mudstone overlain by marine sandstone (sometimes glauconitic), siltstone, and mudstone.¹

Passive subsidence continued during Paleogene time, with organic-rich black shales deposited in Late Paleocene time, followed by an increase in carbonate content during Eocene time. In late Eocene time a new plate boundary propagated into New Zealand,7 but the Canterbury basin was outside the deformed region and continued to passively subside. Transgression reached its peak in Oligocene time, when widespread limestones were deposited.^{1 2 6}

Late Oligocene to Recent deposition reflects progressive uplift and erosion of the Southern Alps, with resulting marine regression.1 Coarse clastic terrestrial and shallow marine sediments were deposited in the west, and localized coarse-grained carbonates in the north. In eastern parts of the basin, distant from rising mountain ranges, fine-grained sediments continued to be deposited.

During the last 5 million years, rapid uplift and erosion of the Southern Alps has greatly increased the supply of coarse clastic sediment. Foreset beds associated with the coastal plains and modern shelf are greater than 1 km thick (Fig. 2). In northwestern parts of the basin, faults have been reactivated and anticlines have grown in response to transpressive plate motion.

Intraplate volcanism is known to have occurred intermittently and locally from Late Cretaceous to Pliocene time, with no apparent pattern emerging.¹ Miocene basaltic volcanoes that resulted in Banks Peninsula and the Dunedin harbor are by far the largest of these features, but smaller intrusive and extrusive centers are widespread and have a variety of ages. Elevated heat flow values associated with volcanism are known to be present near Dunedin and may have caused locally higher levels of source rock maturity.⁸

Petroleum system

Source rocks are Late Jurassic coaly sediments, Late Cretaceous coaly sediments, and Paleocene marine shales (Fig. 3).

The primary source rocks considered by previous explorers have been coaly sediments developed intermittently throughout the thick Late Cretaceous sequence, including rift-related sediments, and possibly some latest Early Cretaceous sediments.¹ Cretaceous sediments occur across most of the offshore basin, and in isolated grabens onshore.

Of the potential Late Cretaceous-Eocene source rocks, a 2002 study9 confirmed that the mid-Late Cretaceous sediments of the Horse Range, Clipper, Katiki, and Pukeiwitahi formations have either reached or are likely to have reached sufficient maturity to have expelled hydrocarbons.

Coaly source rocks in the Pukeiwitahi formation have excellent potential for generation and expulsion of oil as well as gas (mean TOCs 13-70% depending on lithology; average HI ~340 kgHC/ tCorg). The relatively high bulk hydrocarbon and oil yields of Pukeiwitahi coaly source rocks can be attributed in large part to marine influence within the depositional environment.

Coaly source rocks in the Pukeiwitahi formation have comparable petroleum generation characteristics to most Late Cretaceous-Tertiary coaly sediments in the Taranaki basin. Mid-Late Cretaceous source rocks of inferred Horse Range, Clipper, and Pukeiwitahi formations have generated and expelled oil and gas within the deeper parts of the Galleon subbasin, from Late Cretaceous times to the present day.

Maturity parameters, direct hydrocarbon indicators, and 1D modeling results all indicate that the Pukeiwitahi formation sequences in Galleon-1 and Endeavour-1 are early mature for oil generation. One dimensional modeling of a pseudowell site in a deeper part of the Galleon subbasin predicts generation and expulsion of oil and gas from inferred mid-Cretaceous Horse Range and Clipper formations, from Late Cretaceous times to the present day.

The model shows generation having occurred in three pulses, during the mid-Cretaceous, Eocene and early Miocene. The Pukeiwitahi formation is predicted to have just entered the oil expulsion window but is expected to be more mature in deeper and/or hotter parts of the subbasin.

Paleocene marine shales with excellent mixed oil and gas potential (TOC 1-8%; average HI ~300 kgHC/tCorg) are found offshore but are immature over most of the basin.

The most promising reservoir rocks are fluvial, estuarine, and marine sandstones within the Late Cretaceous sequence (Fig. 3). Mid-Cretaceous Clipper formation has measured porosities of 1-16% and permeability values from 0.07 to 11.5 md. Late Cretaceous Broken River formation has measured porosities between 15 and 35%, though the few recorded permeability values are poor (<0.01 to 2.2 md).

However, high flow rates obtained during Galleon-1 testing indicate that good reservoir rocks are present in the Late Cretaceous succession. Onshore, the Eocene Homebush and Iron Creek sandstones have porosities of 30-38% and permeabilities of 163-6,410 md. Miocene Mount Brown limestone is another possible reservoir rock, with a porosity of 43.6% and permeability of 3,105 md measured from one outcrop onshore in north Canterbury.⁵

Seal rocks are regional mudstones, siltstones, and carbonates within the marine sequence, and fluvial or lacustrine siltstones and mudstones within the terrestrial sequence (Fig. 3). Neogene shelf sediments up to 2 km thick have provided sufficient overburden to mature Cretaceous source rocks in pre-existing grabens, but maturity may have been reached earlier in deepest parts of the basin, where more than 3 km of Cretaceous sediment were deposited.

Heating associated with igneous activity could have resulted in raised levels of maturity in some regions, particularly near Dunedin, where Cretaceous coals and Paleocene marine shales may have generated hydrocarbons.2 Igneous and associated hydrothermal activity may also explain anomalously high vitrinite reflectance values of 1-3% at the base of Resolution-1, Endeavour-1, and Galleon-1 wells.

The Galleon-1 discovery clearly indicates that there is a working petroleum system within the basin. Galleon-1 was drilled on a draped closure above a basement high formed in mid-Cretaceous time by normal faulting and associated igneous activity. The compositions of Galleon hydrocarbons indicate source rocks were Late Cretaceous coaly sediments.¹⁰ The Galleon reservoir was estuarine or neritic Late Cretaceous sandstone with average porosity of 17%, and seal rocks were marine mudstone and siltstone.

The relatively low maturity of Late Cretaceous source rocks sampled in Galleon-1 suggests the hydrocarbons mainly formed in an adjacent kitchen area that is in the early stages of maturation (equivalent to 0.6% vitrinite reflectance).¹⁰

Canterbury plays

The basin has three main plays.

The first is associated with drape structures over basement horsts that formed during mid-Cretaceous normal faulting and have been variably modified by Cretaceous and Paleocene intraplate volcanism. Source rocks are Late Cretaceous coal measures in adjacent depocenters, reservoir rocks are Late Cretaceous sandstones sealed by immediately overlying mudstone and siltstone. Three of the four offshore wells were prospects of this type.

The second play has similar source, reservoir, and seal rocks to the first but is associated with stratigraphic trapping of hydrocarbons beneath a Late Cretaceous unconformity. Stratigraphic pinchout of Late Cretaceous coal measures against basement is observed in a number of locations along the northwestern part of the offshore area. A seal is provided by Late Cretaceous and Paleocene marine mudstone. BP Shell Todd considered this play type and identified leads but drilled no prospects.

The third type of play is associated with faults and anticlines that have grown during Miocene to Recent time. Primary reservoir targets are Late Cretaceous or Eocene sandstones, with secondary targets of Oligocene limestones. Seals are provided by immediately overlying mudstone units. Source rocks are Late Cretaceous or Jurassic coaly sediments. The offshore Endeavour-1 well and most onshore prospects are of this type.

Prospectivity

Geochemical measurements, production in the nearby Taranaki basin (Fig. 1), and the Galleon-1 discovery all indicate that Cretaceous coaly source rocks have good potential for mixed gas and oil.

Available samples and seismic mapping suggest source rocks are widespread, and appropriate sandstone reservoir rocks and extensive mudstone seal rocks were deposited before hydrocarbon maturation and migration. It is a reasonable conclusion that commercial volumes of hydrocarbons may have been generated and trapped somewhere in the basin.

More sophisticated modeling, better data, and additional exploration wells are required to establish where any commercial hydrocarbon accumulations might be located and to establish more conclusively why the four offshore wells failed.

BP Shell Todd attributed its failure to find commercial hydrocarbon accumulations to inadequate source rocks, but the conclusion remains speculative. Coals are present at many localities where the Late Cretaceous succession has been sampled, and seismic mapping clearly identifies characteristics consistent with widespread coaly source rocks.

Alternative explanations for the well failures include: a lack of favorable migration pathways; flushing by lateral pressure gradients; maturation or migration issues associated with volcanism; and there may be others.

The Canterbury basin has all the necessary components of a working petroleum system, as demonstrated by the Galleon-1 discovery. The basin is very underexplored, with only five exploration wells drilled to more than 2 km depth. The deeper water area to the southeast has not been explored, but extrapolation of existing seismic data suggests there is sufficient sediment cover for Cretaceous source rocks to be mature.

Downstream prospects

As giant Maui oil and gas field declines, New Zealand faces a gas supply shortfall as well as a decline in oil self-sufficiency. Most new investment in power generation has been in gas-fired plants, and gas is likely to be the preferred fuel for the majority of new generation plants in the near future.

Although South Island is sparsely populated, about 600,000 people live in the vicinity of the Canterbury basin, mainly in the coastal centers of Christchurch, Timaru, Oamaru, and Dunedin (Fig. 2). Each of these has good port facilities. Christchurch, population 330,000, is the largest city and has some gas reticulation.

While the highest gas demand is on the North Island, the need for investment in gas-fired generating plant would encourage its construction in the South Island if there were a major gas discovery in Canterbury basin. There would also be strong incentives for further industrial investment in the South Island, which has been constrained in contrast to the North Island by a lack of access to gas resources.

The New Zealand economic and political environment is stable, there is a strong work and efficiency ethic, and it is certainly a good place to do business.

Summary

The Canterbury basin is barely explored and highly prospective. Its geology is similar to the producing basins of Taranaki and South Australia, which formed at the same time and were adjacent during Cretaceous rifting.

Late Cretaceous source rocks in particular have comparable petroleum generation characteristics to most Late Cretaceous-Tertiary coaly sediments in the Taranaki basin. They have excellent potential for generation and expulsion of oil as well as gas, attributable to marine influence within the depositional environment. The offshore Galleon-1 discovery proves a working petroleum system within the basin.

The Canterbury basin is the northwestern part of a much larger Cretaceous rift (>200,000 sq km) that includes the Great South basin and Bounty Trough. If an economic discovery were made in shallow-water Canterbury basin, then it may become commercially viable to explore and develop the deepwater area, where the total resource inventory could be very large.

References

1. Field, B.D., and Browne, G.H., "Cretaceous and Cenozoic sedimentary basins and geological evolution of the Canterbury region, South Island, New Zealand," New Zealand Geological Survey, Lower Hutt, NZ, 1989, 94 pp.

2. Cook, R.A., Sutherland, R., and Zhu, H., "Cretaceous-Cenozoic geology and petroleum systems of the Great South basin, New Zealand," Institute of Geological & Nuclear Sciences Ltd., Lower Hutt, NZ, 1999, 188 pp.

3. Sherwood, A., Sutherland, R., and Cook, R., "Great South Basin, New Zealand, might hold considerable potential," OGJ, July 19, 1999, p. 78.

4. MacKinnon, T.C., "Origin of the Torlesse terrane and coeval rocks, South Island, New Zealand," GSA Bull., Vol. 94, No. 8, 1983, pp. 967-985.

5. Bennett, D., Brand, R., Francis, D., Langdale, S., Mills, C., Morris, B., and Tian, X., "Preliminary results of exploration in the onshore Canterbury Basin," in "New Zealand 2000 Petroleum Conference," Crown Minerals, Wellington, NZ, 2000, Christchurch, NZ.

6. Carter, R.M., "Post breakup stratigraphy (Kaikoura Synthem: Cretaceous-Cenozoic) of the continental margin of southeastern New Zealand," New Zealand Journal of Geology and Geophysics, Vol. 31, 1988, pp. 405-419.

7. Sutherland, R., "The Australia-Pacific boundary and Cenozoic plate motions in the southwest Pacific: Some constraints from Geosat data," Tectonics Vol. 14, 1995, pp. 819-831.

8. Funnell, R.H., and Allis, R.G., "Hydrocarbon maturation potential of offshore Canterbury and Great South Basins," in 1996 New Zealand Petroleum Conference, Ministry of Commerce, Wellington, NZ, 1996, pp. 22-30.

9. Sykes, R., and Funnell, R.H., "Petroleum Source Rock Potential and Generation History in the Offshore Canterbury Basin," Institute of Geological & Nuclear Sciences Ltd., Crown Minerals, Ministry of Economic Development unpub. petroleum report PR 2707, 2002.

10. Killops, S.D., Cook, R.A., Sykes, R., and Boudou, J.P., "Petroleum potential and oil-source correlation in the Great South and Canterbury Basins," New Zealand Journal of Geology and Geophysics, Vol. 40, 1997, pp. 405-423.

The authors

Rupert Sutherland is a research scientist in the hydrocarbons section and leader of the global plate tectonics program at the Institute of Geological & Nuclear Sciences Ltd. He specializes in structural-stratigraphic analysis of New Zealand's sedimentary basins and tectonic analysis of the South Pacific. He holds BA and MA degrees in natural sciences from Cambridge University and a PhD from Otago University.

Greg Browne is also a research scientist at GNS. He is a stratigrapher-sedimentologist with two decades of experience in Canterbury basin and a specialist knowledge of hydrocarbon reservoir geology. He holds BA, BSc, and MSc degrees from Auckland University and a PhD from the University of Western Ontario.