EXXONMOBIL appears to be banking on Papua New Guinea as a cornerstone of its Asia-Pac

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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.