Stern warning on Stanley for Repsol/HOR

[Tree]

Studies, reviews, 'value engineering', improve project economics........

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Repsol and Horizon handed warning over Stanley project

04 December 2015 01:00 GMT

Repsol and Horizon Oil have been issued a stern warning by Papua New Guinea’s government about the lack of progress on the Stanley gas and condensate field development.

Minister for Petroleum & Energy Nixon Duban said that since a petroleum development licence and pipeline licence had been granted on 30 May 2014 there had been “no tangible progress, and for me as minister it makes me sad that Stanley has not done the right thing. It has been delayed...and their argument of course is that the oil price has come down...and costs are a contentious issue.”

Duban, on PNG’s emtv.com, urged the Stanley owners to develop the field instead of embarking on more studies and more reviews.

He warned that there are specific conditions attached to a development licence, and that if those conditions are not met “we will have no choice” but to issue a notice that opens the way for cancellation of the permit.

PNG sources were perplexed by the minister’s attack on the co-owners, saying it was not unusual during the current downturn for developers to try to improve their project economics.

Others said it is a clear signal that other parties have expressed an interest to the government in taking over the Stanley resource.

Spanish energy company Repsol inherited the operatorship of the Stanley project when it acquired Talisman Energy.

However, Repsol has indicated it is committed to PNG, where Talisman had built a considerable gas and condensate position in Western Province.

Australia’s Horizon has kept the market updated on Stanley, and said at the beginning of this year that a value engineering review process was under way “due to the recent change in market conditions in respect of oil price and costs”.

The aim had been to finalise the revised Stanley development concept for joint venture approval in the second half of 2015, said Horizon. However the latest status is not known. The target timing for first production from Stanley is before the end of 2018.

Stanley was originally conceived as a liquids stripping project, with the gas reinjected for later use.

The plan at Stanley was to produce 140 million cubic feet per day of wet gas and strip out 4000 barrels per day of condensate.

The Stanley joint venture comprises Repsol with 40%, Horizon with 30%, Osaka Gas with 20% and Mitsubishi on 10%.

[Palm]

Think mebbee XOM/OSH are applying pressure?

[jft310]

Could/would Hession work with Repsol ?.Is the government pushing cooperation between project developers ?..If Repsol worked with Interoil would we get a slice again of Stanley ?..Would Repsol get a slice of RBT ??Would that lead to Interoil cash flow from Stanley in 2018 ??? Interesting times .

[Palm]

No way IOC can even be thinking about participating or be taken seriously if they were. You need capital and cash flow to even enterain the thought. Hession has all he can handle in Gulf.

[jft310]

We have assets that can and will be sold in a sell down thus providing cash to Interoil . When and how much are flyers at this moment .

[Palm]

Problem with that line of thinking however is that they need a huge cash reserve to just do what they have to do in their own license areas. If we have learned (at least) one lesson here it's that until we have cash flow generating assets (continuous, month-to-month from a plant), we can hardly have enough cash stockpiled without diluting and/or borrowing and thereby never getting out of the vicious cycle we are in.

Basic Business 101: in this industry a Raggiana in the hand is worth 25 in the jungle

[jft310]

Hession on several occasions has talked about their efforts to do another sell down and the BOD put together a pay package for Hession if he succeeds . When and how much to be determined . Not unusual for others to drill at their expense to provide equity for a buy into assets . Happens all the time .