Oil Search reports major lift in gas reserves, resources

March 6, 2017
Oil Search Ltd., Sydney and Port Moresby, reported a rise in its oil, condensate, and natural gas reserves and resources.

Oil Search Ltd., Sydney and Port Moresby, reported a rise in its oil, condensate, and natural gas reserves and resources. Managing Director Peter Botten said in a statement released Feb. 17 that as of Dec. 31, 2016, the company's proved reserves (1P) stood at 62.3 million bbl of oil and condensate and 2,151 bcf of gas. The company's 2P reserves were 75.7 million bbl of oil and condensate and 2,425 bcf of gas.

Botten said the key changes since yearend 2015 came from the Papua New Guinea-LNG project operated by ExxonMobil Corp. in which Oil Search holds 29% interest.

In 2016, ExxonMobil contracted consultants Netherland, Sewell & Associates Inc. (NSAI) to assess resources in all the PNG-LNG fields taking into account the development and production activity since the consultant's previous field certification in 2009. NSAI's study added 3.5 tcf to the project fields' resource base on a 1C basic and 2.3 tcf on a 2C basis, compared with 2009.

Oil Search has used these estimates as the basis for its 2016 reserves and resources statement. The company says its share of PNG-LNG 1P reserves, including the associated gas fields operated by itself, have increased to 2,151 bcf at yearend 2016 from 1,442 bcf at yearend 2015.

Botten said the increase in proved gas reserves in PNG-LNG is notable because the project only contracts 1P reserves. Currently, 6.6 million tonnes/year of LNG are sold under long-term contract. However production is running sustainably at more than 8 million tpy. Thus the increase in 1P reserves, equating to 2.8 tcf on a gross basis, will provide the JV with the potential to explore market opportunities to contract this additional production. It is currently being sold on the spot market.

Following the recent appraisal campaign at the Elk-Antelope fields in permit PRL 15, operated by Total SA, Botten said Oil Search has reassessed its reservoir models. This has led to a 254 bcf, or 21%, increase in the company's share of Elk-Antelope 2C continent gas resources to a figure of 1,473 bcf along with 13 million bbl of condensate.

Oil Search's figure for gross gas volume in Elk-Antelope fields is 6.5 tcf, which tallies with recent certifications by NSAI (6.1 tcf) and Gaffney Cline & Associates (6.9 tcf).

Botten added that when put with the company's share of 2C contingent resources at P'nyang field in the western highlands of 1,348 bcf (3.5 tcf gross), Oil Search holds significant volumes of undeveloped gas resource. Botten said this is more than sufficient to underpin at least two more LNG trains.

This is without adding the yet-to-be-assessed potential resources of the recent Muruk-1 gas discovery near Hides field. Botten says early data suggests the predrill estimate for Muruk of 1-3 tcf remains valid.

Botten also noted that the company's recent exit from the Middle East-its relinquishment of the Taza licence in Kurdistan and the surrender of Block 7 in Yemen-has resulted in the removal of 21.9 million bbl of oil and 6.3 bcf of gas contingent resources from the 2C category.

Rounding off his comments, Botten said that based on the 2016 production of 30.24 million boe across its permits, Oil Search has a 1P reserves life of 16 years, a 2P reserves life of 18 years, and a 2P reserves and 2C resources life of 44 years.