InterOil gauges gas at Elk-2 appraisal well

By OGJ editors
HOUSTON, Aug. 17 -- InterOil Corp., Toronto, said it has achieved positive results from its Elk-2 appraisal well on PPL 238 in Papua New Guinea.

"We are now confident that the Elk structure contains sufficient gas to underpin the first train of an LNG plant, which will be built by Liquid Niugini Gas Ltd. adjacent to our refinery [planned at Port Moresby], and sufficient oil shows to justify sidetracking to confirm an oil leg," said InterOil Chairman and Chief Executive Phil Mulacek.

The Elk-2 well was programmed to test the entire 2,000 ft Puri and Mendi limestone section in a downdip position of the discovery well 2.9 miles away (OGJ Online, Feb. 13, 2007).

Drilling and testing at Elk-2 confirmed 4,452 ft of indicated hydrocarbon column from the highest known gas in Elk-1 to the lowest indicated hydrocarbons in Elk-2, InterOil said.

Mud logs indicated multiple gas zones, and there were multiple oil shows throughout a 594 ft column. In addition, the well had flowed gas and gas liquids during a drillstem test, the company said.

The target Puri and Mendi limestone reservoirs are much thicker than predrill estimates, it added.

The company intends to drill the Elk-2 well to total depth, log it, complete it, and test it.

"We will then sidetrack the well to intersect the potential oil leg structurally higher in the porous Mendi limestone section," Mulacek said.

LNG plant progress
InterOil has been designated as the preferred natural gas supplier for the planned Port Moresby LNG project, which consists of a two-train, 9 million tonne/year liquefaction plant having a nominal processing capacity of 1.6 bcfd of condensate and gas liquids, handling and storage facilities, and a gas pipeline from supply sources.

InterOil's Elk and Antelope structures are the key gas resources for the project (OGJ, Nov. 20, 2006, Newsletter).

The company executed a shareholder agreement in July with Merrill Lynch Commodities and Pacific LNG to develop the LNG project. The partners agreed to establish PNG LNG as the holding company for Liquid Niugini Gas, which will own and operate the LNG facility.

The joint venture will proceed with contractor selection and front-end engineering and design work during this year.

LNG production is still on track to begin in 2012, InterOil said.

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