Energy company Shell has taken over a deep sea drilling project in an area off the South Dunedin coast where there are early indications of gas deposits.
Its joint venture partner, OMV, has completed a 3D seismic map of the Great South Basin which covered nearly 5000 square kilometres.
Shell New Zealand chairman Rob Jager says the map of the basin needs to be analysed before deciding whether to drill an exploration well.
He says early indications are that there is unlikely to be oil but appear to be gas deposits in the basin.
Mr Jager the company will not commit to an exploration well yet, but if it does, it could be up and running by the end of 2014.
Safety questioned
Environmentalists have questioned how safe the drilling would be, but Shell defends its practice and says it has safety plans in place.
Mr Jager says the environmental impacts are far less with gas than oil if there is a spill and security measures would be put in place in the event of an accident.
Dunedin City Councillor Jinty McTavish says any exploratory drilling has risks to the environment.
Ms McTavish says BP's Deepwater Horizon's exploratory drilling in the Gulf of Mexico had disastrous consequences when the rig exploded leading to the worst oil spill in US history.
Associate Professor Bob Lloyd, who specialises in energy studies at Otago University, says oil is nearly always found alongside gas.
And he says if gas escapes into the atmosphere, it could result in disastrous greenhouse emissions.
