InterOil wins LNG approval in PNG as other project advances

Dec. 11, 2009
The Papua New Guinea government has approved a project agreement for an LNG project planned by InterOil, Cairns, Australia, based on gas reserves in its Elk and Antelope fields in the country’s Gulf province.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 11 -- The Papua New Guinea government has approved a project agreement for an LNG project planned by InterOil, Cairns, Australia, based on gas reserves in its Elk and Antelope fields in the country’s Gulf province.

The agreement establishes the terms for commercializing and monetizing the field resources via an LNG plant to be built near InterOil’s 36,000-b/d Napa Napa oil refinery in Port Moresby.

It came as contract work advanced on another LNG plant planned near Port Moresby.

InterOil’s plans
InterOil plans first to build a $7 billion (US) two-train facility with capacity of 8 million tonnes/year of LNG to come on stream in late 2014 or early 2015.

InterOil proposes then to establish a liquids stripping plant at the field, which could see revenues as early as late 2011 or early 2012.

Last week, the Antelope-2 appraisal well flowed 705 MMcfd of gas and 11,200 b/d of condensate (OGJ Online, Dec. 2, 2009).

InterOil’s chief financial officer, Collin Visaggio, said the company is conducting early front-end engineering and design for the project and expects to make a final investment decision before the end of 2010.

He said InterOil is talking to potential partners with a view to farming out a 25% stake in the upstream side of the project and a 35% interest in the downstream facilities.

Esso project
Meanwhile, following joint venture investment approval for the PNG LNG project near Port Morseby, operator Esso Highlands Ltd. has approved a number of engineering, procurement and construction contracts (OGJ Online, Dec. 8, 2009).

It awarded the prime contract for the 6.6 million-tonne/year plant to Chiyoda Corp. and JGC Corp. The contract covers facilities for processing and treating natural gas, liquefaction, storage, and loading.

A joint venture of CBI and Clough won a contract for the Hides gas conditioning plant. A McConnell Dowell Constructors-Consolidated Group Offshore joint venture will handle infrastructure, including construction of an airfield at Komo, 21 km of upgraded track, plus two new bridges capable of heavy load transport between Hides and the airfield.

SPIECAPAG will provide the onshore pipeline, while Saipem has won the contract for the offshore section of the pipeline from Kerema following the Papuan Gulf coastline around to Port Moresby.

In addition, Oil Search Ltd, Sydney, which operates the oil fields with associated gas that will feed the project, has awarded an engineering, procurement, construction, and management contract to Aker Solutions. This involves construction of all facilities to deliver gas from the producing oil fields to the LNG project.

Total cost of the PNG LNG project is put at $15 billion.