Papua New Guinea and LNG

Sept. 5, 2011
Is it possible that Papua New Guinea's geology could support three liquefied natural gas projects?

Alan petzet
Chief Editor-Exploration

Is it possible that Papua New Guinea's geology could support three liquefied natural gas projects?

Talisman Energy Inc., Calgary, is moving toward such a possibility with a gas aggregation strategy it launched in 2009.

Talisman and others would link by open access pipeline a number of stranded wet and dry gas discoveries in Papua New Guinea's Western Province and build an LNG liquefaction plant either at Daru, across the Gulf of Papua from Port Moresby, or a floating LNG plant in the gulf itself.

Other major players with Talisman are Sydney independents New Guinea Energy Ltd. and Horizon Oil Ltd., with whom Talisman shares considerable territory (OGJ Online, Sept. 21, 2009). Talisman's holding exceeds 9 million net acres on 12 licenses. NGE has 50-100% interest in 13 million acres on six licenses.

Talisman wants to aggregate at least 2-4 tcf of gas from west side discoveries in Jurassic and Cretaceous sandstones, including possibly gas from its own exploratory program.

Existing, planned projects

Talisman's aggregation strategy might lead to a third LNG project after those being shouldered by ExxonMobil Corp. and InterOil Ltd. groups.

Esso Highlands Ltd., an ExxonMobil Corp. subsidiary, plans to liquefy and ship gas from Hides, Juha, and Angore fields and associated gas from Kutubu, Agogo, Moran, and Gobe Main oil fields in the Southern Highlands thrust belt. The fields are expected to produce more than 10 tcf of gas and 200 million bbl of liquids in 30 years.

Ground was broken earlier this year for a 6.6-million tonne/year LNG plant 20 km northwest of Port Moresby, and early right-of-way work parallels the Kutubu oil pipeline. Santos Ltd. and Oil Search Ltd. have interests in the project.

Meanwhile, InterOil Corp., Houston, is working toward a final investment decision by yearend on a project to export LNG from its giant Elk and Antelope gas-condensate discoveries with 5 tcf in Tertiary limestones.

InterOil's proposed LNG facilities in Gulf Province are to have a capacity of 5 million tpy of LNG. Operation is targeted for mid-2014.

Across the island in West Papua, Indonesia, BP PLC's Tangguh LNG project shipped its first cargo in mid-2009. It has two trains of 3.8 million tpy each fed by six gas fields in the Wiriagar, Berau, and Muturi production sharing contract areas in and around Bintuni Bay. Tangguh is Indonesia's third LNG center after Bontang on East Kalimantan and Arun on North Sumatra.

Talisman aggregation strategy

Talisman, which has 3% interest in Tangguh, has built its huge Papua New Guinea land position with acquisition of Rift Oil PLC and Papua Petroleum Ltd., a land swap with Oil Search, and partnering with NGE, Horizon, and Sasol Ltd.

Among the gas discoveries a Talisman aggregation project could tap are, from north to south, P'nyang, Stanley, Elevala, Kimu, Puk Puk, Douglas, and Pandora in the gulf.

P'nyang, an unappraised 1990 discovery owned by an Esso group, is a 1.2 tcf gas discovery that might be expected to contribute to Hides-Juha LNG Trains 3 and 4. P'nyang, while only 50 miles west of Hides-Juha, is separated from them by thirty 3,000-m ravines, making a pipeline unfeasible.

Talisman is nearly down at the Siphon-1 well, a 3,925-m Toro sandstone prospect in PPL 269 just northeast of Stanley. Talisman, NGE, Horizon, and others own large swaths of acreage in the lightly explored PNG Foreland along a possible gas pipeline route to Daru. NGE will shortly welcome its own 4,000-m capacity rig.

To the east, the Esso group has only enough gas to support LNG Trains 1 and 2, and Oil Search plans to resume exploratory drilling in late-2011.

The area north and west of Stanley appears prospective for oil. The 1990s Kau-2 discovery flowed oil to surface in West Papua and the Tarim-1 discovery in PNG flowed Toro gas and logged oil in the Alene reservoir before being junked.

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