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InterOil in the news

December 3rd, 2009 · No Comments

A few interesting articles from Oil&Gas Journal and the Wall Street Journal…

InterOil produces record gas flow at Antelope
Dec 2, 2009
Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 2 –InterOil Corp., Cairns, has surpassed its previous record-high gas flow rate in its onshore Antelope field in Papua New Guinea with an impressive 705 MMcfd flow rate from the Antelope-2 appraisal gas well.

The gas flow was accompanied by 11,200 b/d of condensate.

InterOil noted that the surface flowing tubing pressure during the test was 1,258 psi through a 6-in. choke that was opened to 4 3/8 in.

Antelope-2 was drilled to evaluate the southern extent of the Antelope reef reservoir.

In March, the company flowed gas from Antelope-1 at 382 MMcfd and 5,000 b/d of condensate in March.

Antelope-2 was foreshadowed in September when the company said it had encountered the top of the reservoir about 345 ft higher than predrill estimates.

At the time, InterOil Chief Executive Officer Phil Mulacek said the additional 345 ft of reservoir could result in a meaningful increase in gas estimates.

In mid-November, just prior to the latest test, InterOil said that logging results in the well suggested a 373-m gross gas and liquids column had been interpreted in the upper section of the Antelope carbonate reef.

It added that the dolomite and limestone reservoir appeared to have better average porosity than at Antelope-1.

Following the massive test flow, InterOil says the result confirms Papua New Guinea as a world-class gas resource base close to the well developed Asian LNG market. Antelope-2 and previous wells have confirmed more than 1.2 bcfd of productive capacity.

The high condensate ratio at the top of the Antelope reservoir has added to the field’s economic viability and is likely to be produced via a liquids stripping operation.

Put with previous discoveries at the nearby Elk field, the company’s reservoir engineers estimate total reserves of up to 10 tcf of gas. Independent estimates are now being conducted.

InterOil and partners Petromin PNG Holdings and Pacific LNG are pushing ahead with proposals for an LNG development after submitting a project agreement to the Papua New Guniea government.

Both Prime Minister Michael Somare and Minister for Petroleum and Energy William Duma have voiced their support for the $6 billion (Aus.), two-train LNG plant to be built near InterOil’s Napa Napa refinery in Port Moresby. It will have the capacity to produce 9 million tonnes/year of LNG.

InterOil has selected Bechtel to carry out front-end engineering and design and engineering, procurement, and contracting work for the LNG plant. In addition, the JV had also chosen ConocoPhillips’s optimized cascade process technology for the plant design.

First production from the project is scheduled for yearend 2014 or early 2015.

———–[End of article]———–

Ample Archipelago: Papua New Guinea’s Gas Groove

By Ben Casselman

Papua New Guinea is shaping up to be one of the world’s hottest natural-gas plays.That may seem like a pretty bold statement considering that the South Pacific nation produced a measly 5 billion cubic feet of natural-gas in 2006, and didn’t export any of it. (Texas consumes that much every 12 hours.)

But that’s all about to change. Earlier this year, Exxon Mobil announced it was pushing ahead with plans to build a huge liquefied natural gas export facilty in Papua New Guinea.

And on Tuesday, Australian-based InterOil Corp. announced it had drilled a massive gas well in its Antelope field. How massive? The well flowed at a rate of 705 million cubic feet of gas a day, which nearly doubled an earlier well in field that InterOil was so proud of they got Guiness to certify as a record setter. To help put in perspective just how big these wells are, Devon Energy recently bragged about a well in Louisiana that flowed at 30.7 million cubic feet a day.

Of course, Devon can just hook its well into a pipeline. The road for InterOil is a good deal bumpier. The company wants to build its own LNG export terminal, but it will need a partner to help cover the project’s $6 billion cost. Wayne Andrews, InterOil’s vice president of capital markets, told Environmental Capital that the company hopes to have a partner on board in “a few months,” but even assuming that happens, the project won’t be complete until 2014 or 2015.

It could be worth the wait. Papua New Guinea’s location positions it well to export gas to Japan, Korea and, eventually, India and China. That’s the same market being targeted by big Australian LNG projects like Chevron’s massive Gorgon project. Unlike most of those efforts, the Papua New Guinea fields are on shore and in relatively shallow, conventional basins, meaning they could have a cost advantage over the Australian projects.

And gas isn’t the only game in Papua New Guinea. InterOil’s well also produced 11,200 barrels a day of natural-gas condensate—essentially a very light crude oil

If Papua New Guinea has all this oil, why isn’t the country already a big exporter?

There was some oil drilling there in the 1970s and early 1980s, but the long 1980s oil slump, combined with unrest in the country, stopped the exploration in its tracks. Now it’s picking up again. Besides Exxon and InterOil, Canadian independent Talisman Energy recently bought into the country. No big surprise there: As we pointed out this summer, where Exxon leads, others tend to follow

Tags: IOC