Oil Search Ltd., Port Moresby and Sydney, has revealed that recent high-level meetings between itself, ExxonMobil Corp., and Total SA have resulted in broad agreement for the preferred development concept for the Elk-Antelope natural gas fields in retention lease PRL15 and P’nyang gas field in PRL3 in Papua New Guinea.
The concept will now be presented to the Papua New Guinea government along with other PNG-LNG and PRL3 joint-venture partners for endorsement.
The likely proposal is for the construction the three LNG trains with a total production capacity of 8 million tonnes/year. Two trains are likely to be dedicated to the Papua LNG project, supplied by gas from the Elk-Antelope fields. The additional expansion train will be underpinned by gas from existing PNG-LNG project fields and P’nyang field.
Oil Search executives made these statements during a presentation of the company’s 2017 full-year results. They said negotiations on cost-sharing arrangements and the principals governing integration will begin shortly to enable the completion of technical studies.
Oil Search expects discussions with the Papua New Guinea government on project gas agreements to begin in late March or April with a decision on the front-end engineering and design phase during this year’s second half. This timescale depends on partner approvals and progress on government negotiations.
Oil Search added that LNG from the Papua LNG project will probably be equity marketed and the company has prepared for this by establishing an office in Japan to target key northeast and southeast Asian markets for offtake agreements.
Record earnings
The optimistic note on LNG expansion follows a record year for Oil Search, which saw its total revenue for 2017 rise 17% to $1.45 billion compared with 2016. Net profit after tax was up 236% to $302.1 million. The figures stem from a record oil and gas production of 30.3 million boe for the year.
Oil Search also reported that total 2P and 2C gas reserves and resources increased 3.4% over the 12 months to yearend 2017 to 6,341 bcf, while 2P and 2C oil and condensate reserves and resources rose 1.5% to 125.8 million bbl for the year. These figures do not include the reserves and resources of the recent acquisitions on Alaska’s North Slope.
Based on the 2017 production of 30.3 million boe, Oil Search has a 1P reserves life of 15 years and a 2P reserves life of 17 years. The company’s 2P reserves and 2C resources life is 45 years.
Looking ahead, the company plans to drill three appraisal wells in Papua New Guinea in 2018, including Murak-2, which will be spudded in this year’s second quarter. Other appraisal wells, Kimu-2 and Barrikewa-3, will follow.
Also this year Oil Search will conduct the largest operated onshore seismic program in the company’s history, covering 475 km. It will include acquisition over the Karoma prospect northeast of Muruk as well as a program over licences surrounding the Elk-Antelope fields on behalf of ExxonMobil and within PRL15 on behalf of Total.
