Gov't to Decide Gulf LNG Fate

[Palm]

Always that chance as we know that was the original plan, but the cost of the subsea pipeline is huge and the gov't has to decide whether its worth it. Kavo would kick and scream as he has been prone to do and likely that carries weight. Not so much his screaming but with the XOM project having problems yet again with LOs, and the gov't having promised that Gulf will be developed and Gulf LNG will be part of that (they've already given out development monies for different things in Kerema), it could cause big problems for the coalition govt. Again, this will be their call and all bidders have had to sumbit bids subject to those parameters. Seems to be more thought that developing 236 might lead to that Napa Napa site down the road.

[johnwgrant]

Always that chance as we know that was the original plan, but the cost of the subsea pipeline is huge and the gov't has to decide whether its worth it. Kavo would kick and scream as he has been prone to do and likely that carries weight. Not so much his screaming but with the XOM project having problems yet again with LOs, and the gov't having promised that Gulf will be developed and Gulf LNG will be part of that (they've already given out development monies for different things in Kerema), it could cause big problems for the coalition govt. Again, this will be their call and all bidders have had to sumbit bids subject to those parameters. Seems to be more thought that developing 236 might lead to that Napa Napa site down the road.

Excellent points !   Based on your comments, the only way I see the LNG plant being "pulled" from the Gulf back to Port Moresby is if... (drumroll...)   Exxon is the winning bidder !!! (not a high probability in my opinion).

[Palm]

Always that chance as we know that was the original plan, but the cost of the subsea pipeline is huge and the gov't has to decide whether its worth it. Kavo would kick and scream as he has been prone to do and likely that carries weight. Not so much his screaming but with the XOM project having problems yet again with LOs, and the gov't having promised that Gulf will be developed and Gulf LNG will be part of that (they've already given out development monies for different things in Kerema), it could cause big problems for the coalition govt. Again, this will be their call and all bidders have had to sumbit bids subject to those parameters. Seems to be more thought that developing 236 might lead to that Napa Napa site down the road.

Excellent points !   Based on your comments, the only way I see the LNG plant being "pulled" from the Gulf back to Port Moresby is if... (drumroll...)   Exxon is the winning bidder !!! (not a high probability in my opinion).

"if... (drumroll...) Exxon is the winning bidder !!! (not a high probability in my opinion)."

Don't count those chickens too quickly JWG

[johnwgrant]

Palm: my comment that Exxon is a low probability is based on the simple theory that they have enough of their eggs in the PNG basket already. On top of this, I think the PNG gov't would like a second Super Major involved - just to make sure that they can "optimize" their development timelines. In other words, if there is only 1 Super Major, then they (the Super Major) will set the development timelines for the 2nd LNG plant/development. If there are 2 Super Majors, then the government can push the 2nd LNG project forward independently of the PNG LNG project (Exxon's baby). Of course, there is always the 'friendly' competition between the 2 companies to see how quickly they can begin production and/or quantify reserves !

[Palm]

Palm: my comment that Exxon is a low probability is based on the simple theory that they have enough of their eggs in the PNG basket already. On top of this, I think the PNG gov't would like a second Super Major involved - just to make sure that they can "optimize" their development timelines. In other words, if there is only 1 Super Major, then they (the Super Major) will set the development timelines for the 2nd LNG plant/development. If there are 2 Super Majors, then the government can push the 2nd LNG project forward independently of the PNG LNG project (Exxon's baby). Of course, there is always the 'friendly' competition between the 2 companies to see how quickly they can begin production and/or quantify reserves !

Good points. But remember also that XOM came to the rescue with PNG LNG.  The government picked them to work with local darling (keeping the beauty contest theme going) OSH and promised them the world; quick approvals, no problems, just please build us a project.  With this came the ability of XOM to hold PNG's feet to the fire (remember Electra's "Make no mistake, this is Exxon's island." comment?).  Exxon needs more gas.  Also, don't forget that Shell is working on projects on the other side of the isalnd, and Total is now partnering with OSH.  So XOM really is king right now as they have moved this thing (PNG LNG) along very quickly, given all of the problems that the government was supposed to prevent. Remember also XOM's comment last year that all of the problems and delays have cost them over $1 billion.  That's real money.  The govt can't even come close to pretending that XOM isn't very beautiful and must be in the running very seriously.  Exxon is THE super-major sponsor of this beauty pageant.

[Tree]

 [/quote]

Any chance that we end up going with the "traditional model" - a larger plant built on the InterOil site (Port Moresby) with an long pipeline from Elk/Ant (Just like the PNG LNG layout) ?   How would Kavo take being cut out of the development ?

[/quote]

Even if XOM buys out E/A I've heard they'd be willing and it's makes sense for them to build another plant in Gulf.

E/A pipeline to coast is engineered at 36" and XOM's subsea is 30" and that is good to handle 12Mtpa as I recall.

The dynamics in play are these-

JP/SK need LNG for growing supply deficits, SM's need profitable developments, XOM needs expansion feed, Gulf needs an LNG plant and associated infrastructure and PNG Gov't needs jobs and the tax revenues from PNG LNG expansion and Gulf build and gas related indusries.  IOC has the gas to make this happen and final push to maximize bids is upon us. and there's no realistic way around a bid war.

[jft310]

How about Shell vs Exxon boy that would spark the bidding fire. But frankly I think there is enough NG for both. Why not some type compromise with Exxon getting the early dry NG,IOC the liquids and Shell the later NG or even share the later IOC plant LNG. Per PRE there will be lots of NG that needs an LNG plant home.

[cybersssss]

JFT- Heck what if Total decided they want to be a player too?! Now that gets exciting...

[jft310]

A three some heck I did that in Costa Rica. Nice hills there.
Bring on Total why not??

[cybersssss]

Sometimes the sisters get along and sometimes they fight. One way or another I think it will all be ok.