Upstream developments

[Justin94360]

Upstream developments

Blair Price Thursday, 2 August 2012 PAPUA New Guinea’s upstream scene remains hectic, with Horizon Oil advancing a petroleum development licence application for the Stanley field, Kina Petroleum and Oil Search following up leads linked to InterOil’s Triceratops-2 well, and New Guinea Energy knocking back “unsolicited approaches”. Proposed Stanley field development, map courtesy of Horizon Oil. Horizon, which owns 50% and operates the Stanley field in Western Province (PRL 4), is getting close to applying for a PDL which is required for the $US300 million condensate recovery project it shares there with Talisman Energy (40%) and Mitsubishi (10%). “It is expected that the formal PDL application will be submitted in August, with grant of the licence anticipated some time in the second half of 2012 after government review and assessment and convening of a development forum,” Horizon said in its June quarterly report. Planning is already well underway for this project which is targeting 140 million cubic feet of wet gas per day to result in the initial recovery of about 4000 barrels of condensate per day using a two-train refrigeration plant in the field, with first production slated for early 2014. Horizon said major equipment orders would be placed this month in order to hit this timeline. “Of course this relies on there being no delay in the regulatory approval process [for the PDL grant],” it said. While there are separate plans on the drawing board for a Horizon and Talisman-led condensate recovery project in nearby PRL 21 which contains the Elevala and Ketu fields, Horizon is still awaiting the outcome from ongoing evaluation of the successful Elevala-2 and Ketu-2 appraisal wells. The Parker Rig 226 has moved on from Ketu-2 and is standing by at the Kiunga supply base in the region. “Assuming award of the PDL in September or October, the intention is to move the rig to Stanley to drill the remaining two development wells required, with a view to spudding in late December,” Horizon said. Kina Petroleum Over to onshore Gulf province which is home to InterOil’s Elk-Antelope and most recently Triceratops discoveries, KP and its PPL 338 partner Oil Search are eyeing drilling opportunities. Oil Search-funded seismic has confirmed the Nipa prospect is a good candidate but more seismic follow up is scheduled for the November-December period. In its recent quarterly, KP said Oil Search could acquire 70% of PPL 338 by carrying its costs through a well to a “capped cost”. “Oil Search has extended its option to drill by nominating the Nipa seismic survey to confirm the height of independent closure on the Nipa structure,” KP said. “PPL 338 is also included in Oil Search’s Gulf farm-out effort to confirm enough gas to form a fourth LNG train in Port Moresby [PNG LNG]. “Subject to Nipa demonstrating 1 trillion cubic feet or more of recoverable gas potential it should form an attractive part of this exploration effort.” The success of InterOil’s T-2 well has also influenced the exploration strategy. “Mapping by InterOil suggests the structure climbs to the west and north into PPL 338 an area with 2 identified gas seeps,” KP said. “Oil Search intends flying an aerogravity/aeromagnetic survey over this part of PPL 338 to confirm fault orientation and assess the need for follow up seismic acquisition in this area.” New Guinea Energy Back to the Southern Highlands region, NGE is eagerly awaiting the results of the underway Trapia-1 exploration well in PRL 11 run by PNG LNG project partners Oil Search and ExxonMobil. The well is located close to and has leads extending into NGE’s long-held PPL 277. Consequently Oil Search and Exxon decided to lock this area in by agreeing to buy PPL 277 from NGE in April. But as part of this deal, NGE will receive an additional payment of $A20 million if PPL 277 is upgraded into a petroleum development licence and will receive royalties if petroleum products are produced and sold from this area. While Trapia-1 is making slow progress, NGE’s significant acreage in gas-rich Western province attracted some unexpected bids from unrevealed parties earlier this year. “After due consideration of the current Western Province market dynamics and the board’s view of the value of the company’s PNG acreage, NGE has decided at this stage not to progress with the unsolicited approaches received for certain of the company’s assets,” NGE said in its June quarterly.

[Tree]

..."The success of InterOil’s T-2 well has also influenced the exploration strategy.

“Mapping by InterOil suggests the structure climbs to the west and north into PPL 338 an area with 2 identified gas seeps,” KP said."...

**********

So the seekers are paying attention to IOC's lead. T-2 sounds 'bigger and broader' to them too. Seems risky and bull-headed to allow one's exploration strategy to be influenced by a 'success' that the market (and analysts) place a zero value upon.........doesn't it? Some success.........

[jft310]

Just because we don't know whats going on at T-2 doesn't mean those on the ground on PNG don't have a feel. The PRE buyin tells the tale. IOC needs a deal and its stupid cheap with only E/A. Thats why Exxon and Shell are interested

[Palm]

I think one of the more positive points in that article is that Horizon is now anticipating applying for their PDL this month. Their feel for the DPE Minister position must be very favorable. They once had some of their licenses yanked by Duma and had to appeal to get them reinstated. Now here they are talking PDL. I like that as an indicator that business can get moving with some confidence that DPE will not be in the way.

[jft310]

Horizon has agreed to sell their liquids to IOC's refinery. Its a big deal them getting a PDL. Directly effects IOC and the refinery and their margins.

[petrengr1]

Have a look at Kina Petroleum presentation http://www.kinapetroleum.com/pdf/company...e-2012.pdf chart 14. They think Triceratops continues to the North and West onto their License PPL 338.

Also look at their Nipa Prospect on Chart 13. They think it has the potential of 3TCF recoverable. (25% porosity may be bit optimistic). This prospect is just south of IOC’s Allosaurus prospect and Southeast of IOC’s T-Rex and Seismosaurus prospects.

[Justin94360]

More and more dominoes lining up to fall...

Is that the first one wobbling I see? May just fall when parliament convenes tomorrow.