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Unbelievable! How can OSH and XOM be taken seriously with the PNG LNG project? Last fall OSH said they would be doing more exploration in the first half of 2012, and today they say they are pushing it into the 2nd half, and now they won't know until possibly YE if they have enough gas to underpin the planned expansion of the project. More moved goalposts and missed deadlines. There's no way they will be able to meet their planned production schedule, especially since we just found out that they did things bassackwards on their population studies etc. They must be learning from IOC!:
"As anticipated by some analysts, Oil Search said Tuesday that initial Hides exploration drilling to support a possible expansion of the project has been pushed back until mid-2012, from an original timetable of the end of the first quarter.
"A preliminary view on whether enough gas is available to underwrite an expansion or whether additional activities are required is likely to be formed in late 2012/early 2013," Oil Search Chief Executive Peter Botten said in a statement."
http://online.wsj.com/article/BT-CO-2012...07429.html
I doubt any LNG will ever get produced or shipped out of PNG. May as well shut 'er down. If PNG LNG can't do it, nobody can. Can anyone say "missed deadlines"?
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Ops - "Ma" at work again.
Ken-san, thanks for the mention.
Cheer's
Tusk
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Isn't this another indicator that XOM needs to partner or buy out IOC? After all their problems in PNG and their escalating costs in Australia, they need more and cheaper NG. It is right there with IOC, just sitting on the table.
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Will be interesting to see whether they are one of the bidders. Tough spot for them because it's a little admitting defeat. Their exploration partner OSH is supposed to know what they are doing and finding these sources for future expansion, and they can't come close to finding an E/A (and hopefully T2). It has to eat at them knowing that just EA would give them what they need.
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I see a deal near Napa Napa PRL 236 jointly developed.Exxon can't buy IOC.PNG govt wants two at least projects. Horizon is coming along as a third project.
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I agree XOM would not like doing that, but they are realists, and they have a lot at stake. They simply need more NG... a lot more.
XOM coughed up big bucks to buy XTO, in order to get all its NG in the US. That was not even a good deal at the time, too much premium over market PPS and at the peak of US NG prices. It is certainly much less of a "deal" now that US NG is near $2.50/MCF.
Such recollections must create tender feelings in the XOM executive suites. However XOM is the company most likely to position itself long term, as it has all the resources to pay up when needed to get major assets. Buying XTO made it #1 in US NG, which is what they wanted long term.
Doing the same with IOC in PNG seems quite possible to me. An ego or two might be bruised in doing so, but they could handle that.
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Agree Strategy, I'm sure at this point that decision has been made, and they are in the bidding. Interesting that no real reason given by OSH on the pushback to 2H on the exploration. Could it be due to XOM saying to wait until SD is complete? XOM is at some interesting crossroads with their project and a successful bid would give them what they need to make changes now in construction. The gas going through that pipeline will be conditioned as would IOC's. Last week it was reported that people of Gulf Province were upset and had forced a shut-down of the XOM pipeline progress because ships, etc were in much closer to shore for the construction process. Waters are too deep for these rigs on the other side of the pipeline. So what better time to make necessary adjustments to the pipeline?
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If OSH drilling activities have attracted interest from Majors, one would think Majors would have 'check out ennerOle's String of Pearls' in their 'to do' list.
T-2 comes in as planned and Katie bar the door.
**********
Gas majors eye off Oil Search drilling
Greg Roberts
February 21, 2012 - 6:14PM
Oil Search says its drilling activities in the Gulf of Papua have attracted interest from major energy companies that believe it will find large gas reserves.
One of Australia's largest oil and gas companies said on Tuesday that it had started the largest drilling program in its history.
It will spend more than $US2.2 billion ($A2.05 billion) this year on exploration and activities related to its key growth project, the $15.7 billion PNG LNG (liquefied natural gas) development in which it is a joint venture partner.
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The oil producer lifted its full year net profit by nine per cent to $196.2 million but analysts were more excited about its drilling activities, with the potential for a new major project to add to PNG LNG.
Three offshore discoveries have already been made in the gulf and while the resource could be incorporated into an expanded PNG LNG, Oil Search's managing director Peter Botten named Talisman Energy and Shell as potential farm-in partners.
"We're not an LNG operator per se so, to add credibility to a joint venture, we are in discussions with a number of highly credible experienced LNG operators," Mr Botten told reporters.
"Exxon Mobil, Talisman, Shell and a range of other very credible LNG players are looking at PNG, which at the moment is seen to be pretty attractive to review.
"Hopefully a number of these commit to come into the country and explore."
Three other wells including P'nyang South, Trapia and Hides Gas Water Contact have provided encouraging results with the potential for, optimistically, more than 10 trillion cubic feet of gas reserves.
Extra gas discoveries would support a third 3.3 million tonne train for the PNG LNG project, which Oil Search says could double PNG's gross domestic product.
Oil Search says it is the largest single investor in PNG this year.
UBS analyst Gordon Ramsay said the involvement of major LNG players gave a vote of confidence in the potential technical credentials of the area.
Energy giant Exxon Mobil is operating the project, which is two years into a four-year construction schedule and on track to achieve first LNG sales in 2014, following a recent $700 million cost blow-out related to the exchange rate.
Exxon Mobil's ability to manage projects combined with Oil Search's 83-year knowledge of doing business in PNG was an effective partnership, Mr Ramsay said.
"The investment community and analysts give Exxon Mobil credit for being a stand-out in project management delivery," Mr Ramsay told AAP.
The increased net profit was driven by higher realised oil prices and lower exploration expense.
Those factors more than offset a decline in oil sales volumes and ongoing cost pressures at PNG LNG.
Production in 2011 of 6.69 million barrels of oil equivalent was 12.7 per cent lower than in 2010, related to field declines and a two-week facilities shutdown for PNG LNG Project tie-in work.
The company, which is among Australia's 30 biggest by market capitalisation, will pay a two US cents per share dividend, following an interim dividend of two US cents per share.
The average realised oil price for the year was $US116.09 ($A108.37) per barrel, 44.8 per cent higher than the average price realised in 2010 of $US80.19 per barrel.
The company's shares closed up 17 cents, or 2.6 per cent, at $6.72.
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Gulf of Papua possible large NG reserves? Never heard that before have we? From, IOC management, to Pet, Tusk, Maui, Hemi and many others we have heard that IOC's onshore fields are an extension of the formations in the Gulf as part of the Great Barrier Reef. Of course IOC has never known this; they just have gotten lucky.
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