Since O'Neill/PNG loan enabled OSH to buy into PRL15, is this the 'official' PNG position on LNG development?

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Papua New Guinea LNG project boosts Oil Search's quarterly output by 81%

Sydney (Platts)--23Oct2014/343 am EDT/743 GMT

Papua New Guinea-based Oil Search's petroleum production in the third quarter of 2014 was a record 6.67 million barrels of oil equivalent, up 81% from 3.69 million boe in Q2 and nearly four times the output achieved in the corresponding period of 2013. 



The surge in production for the three months, which was only marginally lower than output for the whole of 2013, was driven by the first full quarter of contribution from the ExxonMobil-operated PNG LNG project, Oil Search said. 



The company's share of output from the two-train, 6.9 million mt/year PNG LNG project was 4.84 million boe.



The PNG LNG project reached full operating capacity ahead of schedule in late July, following a largely trouble-free ramp-up, Oil Search said. The company holds a 29% stake in the project. 



During the quarter, 23 LNG cargoes were lifted from the PNG LNG project and 21 were delivered to Asian buyers, taking the total to 30 LNG lifted and 26 sold for the year to date. 



In September, the first LNG cargo sold under long-term contract was delivered, and all of the project's long-term deals are expected to begin by the end of Q4 2014, the company said. 



Oil Search also benefited during the quarter from steady output at its base PNG oil and gas business, which contributed 1.83 million boe. 



The company said it remained on track to deliver 2014 full-year production within its 18 million to 20 million boe guidance range.



Oil Search and its partners are working to aggregate gas in the Highlands' P'nyang and other fields to support an expansion train at PNG LNG.



The company is also a stakeholder in the InterOil-operated Elk/Antelope gas fields in the Gulf province, which are being appraised to determine whether they can support one or two LNG production trains.



The company said it was targeting final investment decisions on the additional trains by the end of 2016. The trains would start up progressively from 2019 to 2022, Oil Search added. 



"Oil Search's best estimate is that there is more than 20 Tcf of discovered gas in PNG of which only 9 Tcf is under development (committed to the PNG LNG project)," Oil Search Managing Director Peter Botten said. 



"More than 9 Tcf lies in licenses in which Oil Search has an interest ... This is sufficient to underpin at least two and, with modest exploration and appraisal success, potentially three, additional LNG trains in PNG."



Meanwhile, Oil Search completed a six-month strategic review shortly after the end of Q3. The review found that debottlenecking of PNG LNG would be the highest-return project in Oil Search's portfolio.



One of the review's key findings was that Oil Search was uniquely positioned over the next 12 months to drive an optimal LNG development plan in PNG through promoting a cooperation agenda. 



According to the company, around $3 billion of potential capital cost savings and about two years of production acceleration could be achieved through coordinated development of PNG's undeveloped resources. "Because of [our] position across a number of projects, in conjunction with the government as the other stakeholder that owns across all projects ... we're looking at driving and promoting a period of cooperation where the various LNG projects can work together," Botten said at a briefing. 



He added that cooperation could range anywhere between the development of a second standalone project at Elk/Antelope to a completely integrated development with PNG LNG.



Botten said it would be "more challenging" to achieve an FID on a standalone Elk/Antelope project in the 2016 time frame. 



"That's one of the reasons why we are encouraging cooperation between the joint ventures because we think that is the best way of getting the shortest possible time to development and the best way of managing the capital cost of that development."



Elsewhere, Oil Search is part of a joint venture appraising the 1-billion-barrel Taza oil field in Kurdistan. Analysts at Bernstein Research said they expected an extended well test to begin at Taza in the second half of 2015, leading to commercial declaration of the field. 



In the longer term, Oil Search is targeting production growth from 19 million boe in 2014 to 50 million boe by 2022, Bernstein added.

So......OSH with Gov't are driving JV cooperation.  Sounds like more and faster money for IOC.

'Palm' pid='51197' datel Wrote:And really this is what OSH/Botten has been hinting at as a reason for the arbitration; they want to have a say in how PRL 15 is developed and look at the most cost effective development which benefits both the stakeholders and PNG as a whole. After Duban was quoted as saying that the gov't preferred a standalone project there was a news story saying he was misquoted. So who knows at this point. But to make this happen especially Total has to be convinced that a "period of cooperation" can be in their best interest, and of course IOC has to side with Total as the deal is with them. Some big challenges at this juncture because of the question a to just how much gas is in PRL 15. If they hit what most expect and prove up plenty of gas, then the parties can hold hands and have this "period of cooperation". If less is proven up in PRL 15 and other prospects come up short, the hands may become fists that turn into a rumble in the jungle.

Recert<4tcf = PNG LNG integration

Recert ~ 8tcf = standalone & possible PNG LNG integration

recert > 12tcf  = standalone + PNG LNG integration

The more gas you have the easier it is to cooperate.  An expiring PRL15 in 2015 may just be the big swinger in these negotiations.

....."The clock is ticking for the three companies, with PRL 15 expiring next year. So a development must be submitted by then or the license withdrawn. “2015 is a critical year for the InterOil license. A prolonged arbitration is not in the best interest of any company,” Energy Minister Duban warned.".....

When someone says to me  "honestly I tell you"  : I wonder if what he says is true.  When he says";to tell you the truth"  I become suspect.   When  Botten say he is cooperating I wonder why he has to say that..   Is not cooperation what a partnership is about.?

I believe Exxon and OSH want the resource of Elk Antelope and they want it cheap.

IOC has to prove that there is 10T outside of Elk Antelope and Wahoo. With that proved then a plant could be built in Port  Moresby with a shared pipeline to Elk Antelope and economy of scale for 4 trains.. With  production facilities in Port Moresby the resource at Wahoo when proven will be able to be sold at a fair price.. If Wahoo is proven too quickly the PNG will become too anxious  for a deal to be struck.

If we assume that right now the value of Elk Antelope is $60 per share then 10 additional T is worth $90 because IOC's interest is  more than 50per cent greater so we have $150 without Wahoo. and without any other discoveries.. I have read that at final decision the 60 becomes 80. In the hands of an owner with  cash doesnt the 60 become 80 immediately and the 90 become 120. That is why Woodside could pay 150 a share because it is then worth $200 with still the upside of  Wahoo and the other drilling opportunities.

There must be someone that has the ego to be the basin master. I believe Woodside has that ego.