EXXONMOBIL appears to be banking on Papua New Guinea as a cornerstone of its Asia-Pacific LNG export strategy.

Rob Cos dateline='<a href="tel:1375250709">1375250709</a>' Wrote:

EXXONMOBIL appears to be banking on Papua New Guinea as a cornerstone of its Asia-Pacific LNG export strategy.

With the PNG LNG project 90% complete and first exports anticipated by mid-2014, ExxonMobil's PNG horizons have expanded considerably as it mulls the best gas option for a third train.

A commitment is likely by the end of this year, or possibly the first quarter of 2014.

The ExxonMobil propensity to surprise the PNG public first came with its announcement it was in talks with InterOil for possible purchase of 4.6 trillion cubic feet of gas from the Elk and Antelope fields in Gulf Province as potential feed for the third train at the LNG plant near Port Moresby.

At least one key player was not too happy at the news.

Petroleum Minister William Duma, in a couple of interviews, one of them with Radio New Zealand, said he was not in favour of an ExxonMobil deal with InterOil because it would give the global multinational too much power in the PNG gas industry.

Duma was previously known to support the participation of Shell and the national government's Petromin as partners with InterOil but a government statement indicated Prime Minister Peter O'Neill personally favoured the involvement of ExxonMobil.

While there is little doubt at this stage that Elk and Antelope will feed the third LNG train operated by ExxonMobil, the door has been left open for InterOil to use the remaining gas to build a stand-alone LNG plant in Gulf.

From a national and strategic point of view Elk and Antelope make a lot of sense as add-ons to the PNG LNG project.

Wherever the gas source, the third train has always been viewed as an expansion that would be highly profitable given the use of existing infrastructure.

It is even more so in the case of InterOil-owned gas, given its close proximity to the LNG gas pipeline.

The PNG LNG project had always targeted a supply gap in world LNG markets and a speedy expansion would be exquisitely timed, given the uncertainties being generated by shale gas in the US and recent approvals for two LNG export projects from the US.

Given the slowing down in world economic growth and the burgeoning oil and gas production from the US, there is every possibility world export prices of these commodities are about to fall.

And even if oil prices manage to stay firm, as many analysts appear to believe, gas is already under pressure from US LNG pricing linked to its Henry Hub and the clear pressure starting with Japan to delink LNG from oil prices.

What ExxonMobil is doing is putting PNG in the box seat, not just for the third and possibly fourth trains. Its dynamic think tank in Houston could well be contemplating the medium-term potential for a fifth train, for which there is already enough room near Port Moresby – as well as the possibility of a second LNG project.

This scenario was brought home by ExxonMobil's decision this week to spend $US40 million to purchase a 50% stake in PPL269, which lies just below the P'nyang field, believed to host at least 3Tcf, an area that contains many untested targets and a gas discovery from a few decades ago.

PPL269 was purchased from Australia-listed New Guinea Energy subsidiary Kirkland, in contrast to a previous deal in which ExxonMobil and its key LNG partner Oil Search had jointly purchased another property held by NGE.

With one foot in the door in InterOil's Gulf Province gas fields, ExxonMobil will find itself a partner with Canadian Talisman in PPL269.

Talisman has for some years been talking up its goal of becoming PNG's third LNG producer by bringing together a number of stranded fields in Western province.

With its entry into PPL269 ExxonMobil has suddenly made P'nyang much more suited for a separate LNG venture linked to other Talisman-connected gas fields such as Elevala, Ketu and Stanley.

The fields have much better proximity than the current gas pipeline that goes from Hides and Kutubu to the PNG LNG project plant site near Port Moresby.

To some observers it may appear like far-fetched speculation, except that Esso Highlands managing director Peter Graham was today quoted in The Nationalnewspaper as saying that ExxonMobil would be looking at other LNG prospects in the coming decade.

That makes it sound like a second LNG project could be in the offing.

The National quoted him as saying more work needed to be done at P'nyang – some more seismic is being shot there – while Juha and Angore were part of the foundation project at Hides that would be developed as and when they were needed.

"Juha is scheduled to come on about 10 years after start-up," Graham noted

'ebster123' pid='26400' datel Wrote:

'Rob Cos' pid='26397' dateline='<a href="tel:1375250 Wrote:

EXXONMOBIL appears to be banking on Papua New Guinea as a cornerstone of its Asia-Pacific LNG export strategy.

With the PNG LNG project 90% complete and first exports anticipated by mid-2014, ExxonMobil's PNG horizons have expanded considerably as it mulls the best gas option for a third train.

A commitment is likely by the end of this year, or possibly the first quarter of 2014.

The ExxonMobil propensity to surprise the PNG public first came with its announcement it was in talks with InterOil for possible purchase of 4.6 trillion cubic feet of gas from the Elk and Antelope fields in Gulf Province as potential feed for the third train at the LNG plant near Port Moresby.

At least one key player was not too happy at the news.

Petroleum Minister William Duma, in a couple of interviews, one of them with Radio New Zealand, said he was not in favour of an ExxonMobil deal with InterOil because it would give the global multinational too much power in the PNG gas industry.

Duma was previously known to support the participation of Shell and the national government's Petromin as partners with InterOil but a government statement indicated Prime Minister Peter O'Neill personally favoured the involvement of ExxonMobil.

While there is little doubt at this stage that Elk and Antelope will feed the third LNG train operated by ExxonMobil, the door has been left open for InterOil to use the remaining gas to build a stand-alone LNG plant in Gulf.

From a national and strategic point of view Elk and Antelope make a lot of sense as add-ons to the PNG LNG project.

Wherever the gas source, the third train has always been viewed as an expansion that would be highly profitable given the use of existing infrastructure.

It is even more so in the case of InterOil-owned gas, given its close proximity to the LNG gas pipeline.

The PNG LNG project had always targeted a supply gap in world LNG markets and a speedy expansion would be exquisitely timed, given the uncertainties being generated by shale gas in the US and recent approvals for two LNG export projects from the US.

Given the slowing down in world economic growth and the burgeoning oil and gas production from the US, there is every possibility world export prices of these commodities are about to fall.

And even if oil prices manage to stay firm, as many analysts appear to believe, gas is already under pressure from US LNG pricing linked to its Henry Hub and the clear pressure starting with Japan to delink LNG from oil prices.

What ExxonMobil is doing is putting PNG in the box seat, not just for the third and possibly fourth trains. Its dynamic think tank in Houston could well be contemplating the medium-term potential for a fifth train, for which there is already enough room near Port Moresby – as well as the possibility of a second LNG project.

This scenario was brought home by ExxonMobil's decision this week to spend $US40 million to purchase a 50% stake in PPL269, which lies just below the P'nyang field, believed to host at least 3Tcf, an area that contains many untested targets and a gas discovery from a few decades ago.

PPL269 was purchased from Australia-listed New Guinea Energy subsidiary Kirkland, in contrast to a previous deal in which ExxonMobil and its key LNG partner Oil Search had jointly purchased another property held by NGE.

With one foot in the door in InterOil's Gulf Province gas fields, ExxonMobil will find itself a partner with Canadian Talisman in PPL269.

Talisman has for some years been talking up its goal of becoming PNG's third LNG producer by bringing together a number of stranded fields in Western province.

With its entry into PPL269 ExxonMobil has suddenly made P'nyang much more suited for a separate LNG venture linked to other Talisman-connected gas fields such as Elevala, Ketu and Stanley.

The fields have much better proximity than the current gas pipeline that goes from Hides and Kutubu to the PNG LNG project plant site near Port Moresby.

To some observers it may appear like far-fetched speculation, except that Esso Highlands managing director Peter Graham was today quoted in The Nationalnewspaper as saying that ExxonMobil would be looking at other LNG prospects in the coming decade.

That makes it sound like a second LNG project could be in the offing.

The National quoted him as saying more work needed to be done at P'nyang – some more seismic is being shot there – while Juha and Angore were part of the foundation project at Hides that would be developed as and when they were needed.

"Juha is scheduled to come on about 10 years after start-up," Graham noted

This is all very positive, however, the wording of possibly waiting until Q4 2013/ Q1 2014 to commit is a delay and time for shorts to play more unless I am misinterpreting something.

"A commitment is likely by the end of this year, or possibly the first quarter of 2014.

The ExxonMobil propensity to surprise the PNG public first came with its announcement it was in talks with InterOil for possible purchase of 4.6 trillion cubic feet of gas from the Elk and Antelope fields in Gulf Province as potential feed for the third train at the LNG plant near Port Moresby."

I believe the author is referring to FID on the PNG LNG expansion, which will follow closure of Exxon's SPA with InterOil.  FID by year-end does not imply any delay and would require execution of the SPA to occur very soon.

Agree; "commitment" in this industry is FID, not an HOA/MOU/SPA.

More gas/LNG news from PNG Industry News:

Event Horizon
Blair Price Wednesday, 31 July 2013

HORIZON Oil is eyeing more field development milestones in Papua New Guinea, as the Tingu-1 well looms and discussions continue over supplying gas-fired power to Ok Tedi and the significant Frieda River copper-gold project.

This Horizon Oil presentation slide suggests its mid-scale LNG plans with Osaka Gas are based on floating LNG.

In regards to the key Stanley field in Western province it shares with Talisman Energy and its new partner Osaka Gas, Horizon was encouraged by a technical review meeting held with Department of Petroleum and Energy officers in July. “All outstanding technical matters relating to the Stanley field development were brought to a conclusion to the satisfaction of the DPE,” Horizon said. Landing a gas agreement with the government and hosting a development forum to bring together landowners are the next steps Horizon is working on.

Plans to commercialise the field’s condensate are more advanced and a custom 90m condensate tanker remains under construction in China for yard delivery in the first three months of 2014. At Petroleum Retention Licence 21 southeast of the Stanley field, front-end engineering and design work for a similar condensate recovery project is expected to be finalised in the March quarter along with a development licence application. The Tingu-1 well in this Horizon, Talisman, Kina Petroleum, Mitsubishi and Osaka-shared licence is expected to take 45 days to drill and spud in the third week of August. Horizon said this well has the potential to be of the same size of PRL21’s Elevala field which has a 2C contingent resource of about 400 billion cubic feet of gas and 22 million barrels of condensate.

On the domestic gas sales front, Horizon observed Mining Minister Byron Chan’s recent desire for the government to acquire Glencore-Xstrata’s 82% stake with interest. “The development plan for Frieda River involves gas-fired power supply with gas sourced from Stanley field, which would potentially account for a large portion of the Stanley gas volume,” Horizon said in its quarterly results. “There are clear synergies with supply of gas-fired power to the operator of the closer Ok Tedi mine, with whom Horizon Oil is currently in discussion.”

The New Zealand and Chinese oil producer also made some new insights into its milestone-linked, 60/40 LNG project-making strategic alliance it struck with Osaka in May. “The consideration payable by Osaka Gas implies a valuation of Horizon Oil's PNG assets of about $US500 million, which meets the board's expectations of value,” Horizon said. “Osaka Gas' experience as a participant in LNG projects, its LNG engineering capability and its role as a large scale offtaker, transporter and distributor of LNG all add credibility to the venture and will enable Horizon Oil to play its part and participate in a substantive mid-scale LNG development, which has the potential to generate large, long-lived cash flows.” Horizon said the milestone cash payments will provide funding at critical stages and no barriers were expected to final regulatory approvals for completing the transaction.

Outside of PNG, Horizon’s share of crude oil production from its part-owned fields in New Zealand was 79,369 barrels in the June quarter, up 2.5% from the previous quarter. Its investments in offshore China are beginning to pay off with the Beibu gulf project kicking into gear, producing about 10,000 barrels per day of crude. Oil sales from it started in the recent quarter and Horizon’s share of crude oil production was 177,276bbls up from 6152bbls in the previous quarter.

UPDATE: Horizon’s shares are in a trading halt pending an announcement with normal trading expected to start again tomorrow.