LNG industry accepted volumes of 4Ts per train means much is riding on these appraisal/in communication wells.
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Gulf LNG. InterOil’s exploration activities include nearly 4 MM acres in the south of the country (FIG. 2). The area is divided into four petroleum prospecting licenses (PPLs) and two petroleum retention licenses (PRLs). This exploration activity is one of the largest drilling programs in the history of Papua New Guinea.
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Fig. 2. InterOil’s exploration activities in southern Papua New Guinea. |
The $7 B Gulf LNG project has the potential to become Papua New Guinea’s second mega-scale LNG project and a direct rival to ExxonMobil’s PNG LNG project. Total, InterOil and Oil Search will develop the project. Gulf LNG calls for the development of the giant Elk and Antelope gas fields (PRL 15) and the construction of Papua New Guinea’s second LNG export terminal. With estimated gas reserves of over 5 Tcf and over 75 MM barrels of associated liquids, these fields collectively represent one of the region’s largest gas discoveries in 20 years.
Gas and condensate from the fields will be sent to a central processing facility. From there, the products will be sent via pipeline to the Gulf LNG plant, which will be located directly north of Port Moresby. The terminal will initially include two 4-MMtpy LNG trains. Total capacity could rise to 12 MMtpy if a third train is added in the future. The terminal will consist of liquefaction facilities, a storage tank farm, an LNG export terminal, an offloading system, offsites and utilities.
Just two years ago, Gulf LNG’s future looked dim. InterOil almost lost the project due to a dispute with the Papua New Guinea government over the project’s export capacity. The original 2009 project agreement plan required InterOil to develop a multi-train LNG terminal with a processing capacity of 7.6 MMtpy, with the option to expand capacity to 10.6 MMtpy.
However, InterOil’s plans eventually shifted toward two LNG projects instead of one. The new plan called for the construction of a 2-MMtpy FLNG vessel and a 2-MMtpy onshore LNG plant. The Papua New Guinea government argued that the new export contract was a breach of the 2009 project agreement.
The dispute was eventually resolved under new conditions calling for the construction of two separate LNG trains, but with a minimum processing capacity of 3.8 MMtpy. InterOil was also required to involve an experienced operator to run the upstream installations. The company found that operator in December 2013 when it signed a deal with French oil and gas major Total. The agreement shot a breath of life into the project, allowing it to continue.
Negotiations between the two companies were finalized in April. The final financial decision is expected to come in 2016, with first sales and operations scheduled to begin in 2020. GP
