Talisman holds out for Papua New Guinea gas

By Russell Searancke Sydney Australia

06 December 2012 23:59 GMT

Talisman Energy is taking a measured approach to the planned development of its gas resources in Papua New Guinea where a greenfield liquefied natural gas project remains the goal.

The Canadian company has a very dominant acreage position in the Foreland basin in Western Province and, despite accumulating 1.6 trillion cubic feet of proven and probable contingent gas resources through acquisition and drilling successes, Talisman needs more gas to underpin an LNG project based out of the southern port town of Daru.

Talisman has previously indicated it wanted to aggregate between 2 Tcf and 4 Tcf of gas to underpin a development.

Paul Atkinson, Talisman’s vice president for Australia and PNG, reiterated that this remains the target, and that Talisman believes “there is sufficient prospectivity to go well beyond that”. The idea would be to build an LNG train with a minimum capacity of 3 million tonnes per annum.

Atkinson said the aim is to confirm this resource base by early 2015, and form a final consortium to develop the gas in a similar timeline “leading to first LNG in 2019”.

The company’s strategic alliance with Japanese conglomerate Mitsubishi, established earlier this year, will form the core of the LNG owner consortium.

“There is currently an unprecedented level of interest in exploration in PNG,” added Atkinson.

Its current joint venture partners in PNG include Horizon Oil and New Guinea Energy.

PNG’s Minister for Petroleum & Energy William Duma said this week he expects a Talisman Energy-led group to have enough gas resources to underpin the country’s third LNG project.

Duma paid tribute to Talisman and Horizon Oil which are developing the Stanley gas and condensate project for start-up in 2014, followed by the Elevala-Ketu development.

Both are gas recycling schemes whereby the condensate is produced and sold and the gas reinjected for later use.

Duma said that, after Stanley and Elevala-Ketu: “I then expect there will be sufficient developed gas resources, aggregated within additional gas resources in licences in Western Province held by a Talisman Energy-led group, to underwrite PNG’s third LNG project.” The country’s first two LNG schemes are the ExxonMobil-led PNG LNG project, and the proposed InterOil Gulf LNG project.

Duma said he had placed no timelines on Talisman, but expected it to be of a similar scale to the planned InterOil Gulf project, which is 4 million tpa.

Remember this from Last Feb? It's like a gold rush as things have been proven up.

There’s increased interest in Papua New Guinea by major global energy companies keen to unlock the value of the country’s substantial oil and gas assets.

Last week, Mitsubishi entered into a joint venture to develop leases held by Canada’s Talisman Energy in Western Province for potential gas exports.

Exxon Mobil is already leading the major Liquefied Natural Gas project in PNG while this month, Shell announced it’s setting up an office in Port Moresby to further its alliance with the state energy company, Petromin.

And now PNG’s Oil Search Ltd has announced its drilling activities in the Gulf of Papua are attracting interest from major players.

Johnny Blades reports:

The full extent of PNG’s energy resources is still unknown, but exploration activities underway are throwing open doors of big business opportunity.

Oil Search says recent extra gas discoveries would support a third 3.3 million tonne supply for the PNG LNG project, which it says could double PNG’s gross domestic product.

Development of PNG’s oil fields has been ongoing for almost two decades but according to Gordon Ramsay, an analyst for the global financial services company UBS, the gas sector is beginning to take off in a major way:

“Gas is starting to be commercialised and there’s some world class gas discoveries in Papua New Guinea. The Hides field is quite large and one of the cornerstone fields behind the PNG LNG Project which is slated to come on stream towards the end of 2014. (Canadian company) InterOil’s also looking at moving forward with a project in Papua New Guinea - LNG as well. So there’s activity, certainly, on commercialising the substantial gas resource that PNG has.”