Matahio Energy New Zealand is the owner and Operator of four oil and gas permits onshore, Taranaki, North Island, New Zealand; three production permits, respectively Cheal (PMP 38156), Cheal East (PMP 60291, 70% Operated interest) and Sidewinder (PMP 53803) and the Puka (PEP 51153) exploration permit. The Cheal operations are connected to and managed from the Cheal Production Facility, which supports the remotely operated Sidewinder site.

Cheal has been in production since 1995, with Sidewinder coming online in 2011. Combined daily production is approximately 1,500boepd (Gross), which is expected to increase in Q2 2023 with the drilling of the new B11 infill well. Matahio plans to drill the Oru-2 exploration well on the Puka permit later in 2023. The Oru Prospect lies adjacent to the previously produced Puka field and represents an exciting evolution of Matahio’s organic growth story in New Zealand.

Puka (PEP 51153)

Matahio Energy is the 100% owner and Operator of the Puka exploration permit. Following a comprehensive re-assessment of the permit’s potential, including seismic reprocessing and application of state-of-the-art inversion workflows, Matahio plan to drill the Oru-2 exploration well in Q3 2023.  The Oru Prospect lies adjacent to the previously produced Puka field and represents an exciting development opportunity to enhance production in New Zealand.

Service Contract 14C (Galoc Field) is located 60km northwest off Palawan Island, offshore of the Republic of the Philippines. Matahio Energy holds a 79% operating interest via its wholly owned local entity NPG, alongside domestic partners.

Galoc has been in production since 2008 and recently passed 24 MMstb recovered. The field produces 1,500bopd (Gross) via four subsea wells tied back to a Floating Production, Storage and Offloading (FPSO) vessel “Intrepid Balanghai”, which is also owned by Matahio. Since taking over as Operator in late 2018, the Matahio team have halved the asset’s operating costs. Consequently, the field is now expected to produce into the late 2020’s.

The FPSO and subsea facilities are managed by THREE60 Energy under a Life-of-Field Operations and Maintenance contract, supported by NPG’s operations team in Manila and technical experts in Singapore and Kuala Lumpur.

Matahio Energy are the 100% owner of the FPSO Intrepid Balanghai, a a Panama-flagged vessel with IMO 8009569 and classified by the American Bureau of Shipping (ABS).  Key technical specifications include:

• Overall length                         234 m
• Dead weight                           65,320 MT
• Production capacity:
  • Total liquids                25,000 bpd
  • Produced water          15,000 bpd
  • Gas handling              40 MMscf/d
• Crude Storage                        432,823 bbl
• Mooring                                   9-leg turret
• Risers                                      6 slots (currently 2 spare)
• Helideck                                  Super Puma

The vessel is currently located at the SC14C Galoc Field, offshore Palawan in the Republic of the Philippines.  The vessel is operated in partnership with THREE60 Energy as Operations and Maintenance contractor.  Matahio are actively seeking re-deployment opportunities for the FPSO, with a particular focus on Philippines opportunities.

Offshore Philippines – innovative cost restructuring leads to a 50% reduction in lifting costs

Matahio’s management team has successfully operated an offshore Philippines field since late 2018. At this time, the field has been producing for ten years and had entered late life. Through the process of operatorship transition, the team was able to target several operational cost optimizations and contract enhancements, resulting in a 20% reduction in OPEX in the first year. 

However, the 2020 oil price challenge prompted the need for a fundamental – and sustainable – change in the operating model in addition to short-term – but ultimately unsustainable – cost savings. The Matahio Management Team undertook the following structural changes to the asset’s cost structure:

1. Take control of critical infrastructure. The Operator acquired the FPSO and leased it back to the joint venture at a significantly reduced bareboat charter rate. Importantly, Matahio now has direct control of this vital piece of infrastructure, including the freedom to execute brownfield projects, the first of which is targeting a 20% reduction in GHG emissions.
2. Form innovative alliance with technical partner. A strategic partnership was established with THREE60 Energy for the operation and maintenance of the FPSO. The nature of this partnership drives long term cost optimization in line with declining production rates and / or oil fluctuations, balanced with ensuring asset integrity and reliability.
3. Align with critical service providers. Leveraging strong relationships with local contractors, long term agreements were enhanced to include reduced rates when the oil price is low, but shared upside when the oil price is high.
   

The above has, collectively, significantly lowered lifting costs by >50% and has introduced several further levers to lower these even further in the event the oil price reduces substantially (as it did in 2020). Ultimately, the economic field life now has the potential to be extended well beyond current service contract expiry.

The company also maintained a strong working relationship with the Philippines Department of Energy, receiving constant support to maximize the field’s potential.

Unlocking GHG reduction initiatives through a commitment to energy transition partnerships.

Matahio’s ethos has been decarbonising from within its operations as the first step to reducing its overall carbon footprint. This is the primary mechanism by which Matahio contributes to the energy transition agenda as a responsible and sustainable oil and gas producer.

This energy transition work has been integrated into a companywide ESG plan.

By identifying and maturing decarbonisation opportunities, Matahio has unlocked several greenhouse gas (GHG) reduction initiatives by forming and leveraging meaningful partnerships with varied objectives.

1. Technical problem solving through collaboration:In the Philippines, a technical working group consisting of Matahio, an O&M provider and niche Engineering specialists have together found a potential solution to reduce the carbon intensity of Matahio’s FPSO flare stream by retrofitting a small-scale condensate recovery unit, fabricated from existing materials and equipment. Currently, in the FEED stage, this project targets a sustainable reduction of the asset’s carbon footprint of 20% and complements other ongoing studies to find further deep decarbonisation opportunities.
2. Consolidating an Industry-wide voice: In New Zealand, the Matahio management team has worked in partnership with Energy Resources Aotearoa (“ERA”, the Industry Body for NZ’s Energy sector) on a range of energy transition initiatives as part of ensuring the oil and gas industry has a “seat at the table” alongside government, industry peers and innovators in shaping NZ’s energy transition strategy. This work was kicked off via the public issuance of an energy transition position paper, “Fuelling the energy transition”, and the formation of an Industry Accord, which formalises commitments to GHG reduction. This is considered a world first. As part of this, Matahio’s COO is part of an ERA committee looking to inform New Zealand’s regulatory framework for Carbon Capture & Storage (CCS).  At this year’s Energy Council APAC assembly in Singapore, ERA and Matahio will together-present their energy transition work and demonstrate to the wider investment community that smaller oil and gas players have an important role to play in navigating the trade-offs between emissions reduction, energy security and transition; a subject that is particularly important in NZ.

3. Building innovative partnerships: Finally, Matahio has conducted a screening exercise for emerging technologies in the emissions reduction space. As a result of this work, Matahio NZ has initiated a more targeted study in collaboration with New Zealand’s National Institute of Water & Atmospheric Research (NIWA) to explore novel approaches for CCUS (Carbon capture, utilisation and storage). Whilst CCS remains challenging for smaller operations, such novel solutions as those being studied are hoped to identify pathways to achieving the desired impact in emissions and managing other waste streams.

Matahio New Zealand’s approach to decarbonising its growing oil and gas assets as part of a wider net zero plan

Emissions reduction is a primary objective for Matahio across all of our operations. As a smaller player, our immediate contribution to the energy transition is the decarbonisation of our core oil and gas business. Matahio’s thesis is that the sustainable growth of our oil and gas business in the near term puts us in a strong position to diversify into, promote and ultimately deploy financial and human resources into lower carbon energy solutions in the mid to long term.

The New Zealand example:

We lead by example in Taranaki, New Zealand, where, despite our emissions intensity already being well below the country’s average for other companies in the region, significant work is underway to reduce it even further. Our decarbonisation objectives include:

• Contribute to sector-wide emissions reduction (ERA Accord) to align with New Zealand’s overall net zero mandate.
• Put forward a viable pathway that achieves net zero and, at the same, grows long-term hydrocarbon production.
• In achieving the above: promote employee skills development, increase energy security and associated revenues for the Crown and prepare Matahio New Zealand to diversify to a low carbon business in the future.
• Demonstrate the effectiveness of New Zealand Emissions Trading Scheme (ETS) as a hard incentive to decarbonise.
• Set the example for a broader decarbonisation of current and future Matahio assets in the Asia Pacific Region.

Matahio New Zealand net zero roadmap:

Matahio New Zealand’s decarbonisation strategy is informed by its overall Net Zero roadmap (see below). It charts a process where our approach moves from purchasing ETS units to emissions reduction via fuel gas optimisation and operational improvements and then to deployment of carbon capture techniques. This roadmap underpins a bottom-up 2030 Net Zero emissions target. The option of offsetting emissions through forestry is also a key consideration. In line with this plan, 2023 sees the start of investment into abatement projects and research into novel CCUS technologies for deployment by 2026.

A structured approach to decarbonisation

Matahio New Zealand has anchored its decarbonisation plan to an abatement curve specific to our New Zealand assets (see below). By dissecting the various component parts of our asset’s emissions, a bottom-up emission reduction opportunity list was crafted. Matahio New Zealand’s first abatement curve was developed from this list; this enabled a prioritising of decarbonisation projects not just based on the emissions reduction quantum but also on economic benefit. On the latter, decarbonisation projects are made even more attractive by considering the impact of the New Zealand Emissions Trading Scheme (“ETS”). By actively participating in ETS, Matahio New Zealand can now showcase the scheme’s effectiveness in incentivising players to decarbonise and set an example for the development of similar schemes across the Asia Pacific Region.

Carbon Capture & Storage (CCS): Small-cap approach vs. NOC / Majors large-scale CCS

In most other long-term decarbonisation strategies, Major players look to Carbon Capture as a sustainable way to offset residual emissions consistently and continually.

Matahio has examined the various ingredients required to make CCUS viable for its New Zealand assets – separating the CO₂, handling the same CO₂, finding a reservoir to inject and store it in, managing the integrity issues that come with CO₂ (a potentially corrosive substance) and understanding if there is a mature Regulatory framework to govern all of the above.

All in all, considering these factors, CCS remains prohibitive for small players, who do not have the same scale of operations as the Majors / NOCs. However, Matahio believes that with other incentives, emerging technology & the drive for more (cross-asset and cross-industry) CO₂, the potential is there.

Other technology alternatives also require scale – however, Matahio is now piloting novel solutions at a small scale, working with the New Zealand National Institute of Water & Atmospheric Research (NIWA).

At this stage, working together as an industry is key. Matahio has established key strategic partnerships with industry peers to actively participate in Energy Resources Aotearoa’s working group to shape CCS regulations in New Zealand.

Supporting our community through the Energy Transition

Amidst its operations in Taranaki, Matahio is steadfastly committed to developing the future of the society we operate in. A focus on youths as the future of energy transition has brought about its partnership with the Taranaki Rugby Football Union, participation in career fairs, offering internship positions, and involvement in local schools. In particular, Matahio focuses on supporting education development in Science and Engineering to build interest in a sustainable future.

Accord Partners Reduce Emissions In 2023 Update

New Zealand’s carbon emissions from the energy resources sector are 2.35 million tonnes per year lower than they were in 2010, thanks in large part to efficiency and emissions reduction initiatives by New Zealand’s sector. That is one of the key insights from the 2023 progress report released today, one year after the commencement of the Energy Resources Sector Net Zero Accord.

The 2023 update, Powering our low-emissions future, showcases the work Accord signatories are undertaking to share best practice and improve upon their emissions reductions to date as part of a managed, affordable, and durable transition to net zero emissions by 2050.

John Carnegie of Energy Resources Aotearoa, the Convening Partner of the Energy Resources Sector Net Zero Accord, says:

“Energy Resources Aotearoa is very proud to be the Convening Partner of the Energy Resources Sector New Zero Accord. A year on from the release of the Accord, the energy resources sector has demonstrated meaningful progress in reducing its overall emissions and improving its emissions efficiency. The 2023 update released today showcases this activity on the ground through several innovative projects being undertaken by the sector.

“These innovative projects showcase New Zealand’s energy sector’s commitment to sustainability, while ensuring Kiwi households and businesses have access to affordable and reliable energy options.”

Carnegie says that while the initial signatories of the Energy Resources Sector Net Zero Accord have comprised the major natural gas producers in the country, he encouraged other firms from across the energy value chain to become signatories or supporting partners.

“New Zealand’s transition to a net zero emissions future requires a community of likeminded organisations working together and sharing best practices. The support partners to the Accord underpin this journey by providing their services, infrastructure, insight, and experience to ensure there is ongoing innovation and collaboration across the sector.”

“With New Zealand on the cusp of having a regulatory regime that would allow carbon capture projects to proceed, now is a very exciting time for New Zealand’s energy sector to play an important role in delivering a net zero emissions economy. The Accord provides the platform for constructive engagement between the sector and the incoming Government, whomever that might be.”

> Progress Report