Here are the comments "bonkthegrups" posted today on the Peter Graham interview (please forgive me if needed!) and my response also posted on Yahoo. A number of comments and excerpts from OSH analyst reports he had posted elsewhere are involved. I would be interested in any other relevant information or comments anyone here would like to add, or feedback/questions posted here or communicated by message on any errors I may have made. I would say that bonk is trying to mislead people on various issues, and convince people that a deal is not likely anytime soon, and that any FID on an expansion train using E/A gas would be for Train 4 and "years away".
My response:
bonk, the interview with Exxon's Graham is not the issue or problem here. The problem is your flawed and biased interpretation and presentation of that and other information, which is full of holes. Actually, I don't think it's just a matter of interpretation; I think there is a concerted effort on your part to distort it and make the outlook for IOC look as negative and far out as possible, and do so for personal gain, which makes what you are doing very questionable legally. I think your claim that all this research and work by you is just pure entertainment is a pure lie.
I agree about most of what is in the interview, although you have changed some sequence and enphasized or downplayed some to fit your claims, and agree that Exxon is probably not "desperate" about anything. However, Graham does say, "We have a very active program underway to move expansion plans forward as fast as we practically can." If not desperate, it sounds like they are at least in a hurry, which makes sense given the LNG market timing and the potential profitability of additional trains. An energy expert also interviewed said they need to move ahead with expansion "as soon as possible". Of the three provinces Graham refers to in general as having "good additional gas prospects", he names and discusses only one, the one with E/A, and confirms they are in active negotiations with IOC for gas for Exxon's expansion. He names NONE of the other options and gives no indication whatsoever that Exxon is actively involved in assessment or evaluation of any other locations for the first expansion train. If anyone is "desperate" in this situation, it's probably OSH, or perhaps shorts in IOC. OSH itself has stated in filings/presentations that it MAY have the opportunity to invest and participate in a train expansion using E/A gas.
Furthermore, regarding IOC and the E/A gas they are pursuing, Graham states the following in this sequence, "It is sufficient for one train, one additional train AT LEAST." Then he goes on to say, "Before any expansion project moves forward based on any resource there's going to need to be a definition of what reserves are available, and that's true as well for the Elk/Antelope resource." He is making that statement about all the potential expansion resource locations, but has already stated that E/A has enough for "one additional train AT LEAST", leaving the remaining question for E/A being whether it has enough resource for a second expansion train, an option left open for potential negotiation in the parties' original announcement of negotiations. I believe E/A is the ONLY expansion resource option having been Certified by an independent third party as having the 4.6 Tcf for expansion desired by Exxon. IOC has also made it clear that the additional drilling and recertification in the next year agreed on is for the primary purpose of determining what percentage ownership of PRL 15, which includes some undrilled prospects as well as E/A, the 4.6 Tcf of gas would represent for Exxon. Also, however, depending on what decisions IOC makes on a Gulf LNG project, what that further "definition" of PRL 15 reveals about additional gas beyond the 4.6 Tcf, what additional gas resources OSH and Exxon can finally "define" and confirm/certify at other locations with low enough costs, and how much more gas IOC might find at Triceratops or elsewhere, given the five trains at least Exxon would like to expand to, Exxon might end up later coming back to IOC for more gas!
OSH (Oil Search) hopes for confirming enough additional gas resource for even one additional expansion train lie with finding additional gas at Hides, P'nyang, or other "prospective" fields not even drilled yet that "could" hold "substantial" gas, as cited by OSH and the retail analysts listening to them, the ones cited by bonk several times. A careful reading of those selected excerpts combined with facts from elsewhere can be very revealing. Bonk stated elsewhere that Hides "has enough gas to drive a third train for a decade or more". Well, Exxon did not build a $19 billion LNG project depending on 10 years worth of confirmed gas, and it is not going to build expansion trains depending on 10 years worth and hopes elsewhere. OSH spent $210 million on offshore wells in the Gulf on estimates and hopes of huge gas finds, and just capped and abandoned its third well there, with nothing huge confirmed in the others.
On Hides, an analyst cited by bonk said, "OSH will also LOOK AT the Hides field itself (because it is very important to understand the size and shape of Hides, not only for PLNG 1 & 2 but also for expansion). This will help to determine what POTENTIAL for upside exists." "We anticipate the drilling campaign will continue through the end of 2014." NOTHING even confirmed, much less certified, there for expansion! Citi hopes, apparently based on estimates from OSH, that they could find an additional 2.5 Tcf there to somehow combine with P'nyang to get a train's worth.
P'nyang is much farther northwest away from the LNG plant and in mountains even more steep and rugged, and even more costly to drill in and build infrastructure for, an issue referred to by Graham in the interview, and is not currently in the PNG LNG JV. A cited analyst says it has an "ESTIMATED" (apparently by OSH) "gas resource of 2.5 - 3.0 Tcf" (25% guesstimate spread there), and that "OSH BELIEVES there is further upside POTENTIAL in PRL 3, BUT REQUIRES APPRAISAL DRILLING ALONG WITH CONCEPT SELECTION STUDIES." Bonk said "P'nyang is in the same area" (FALSE unless talking about a very wide area, with worse geography). He also said, "it makes more sense to use existing JV resources" (FALSE) "for train 3 because it is technically and commercially simpler and faster" (NOT, LOL).
Bonk said elsewhere, "I think Phil's stranded jungle gas would only make sense for a 4th train, to come at a later date, after additional drilling and testing/recertification." Based on this interview with Exxon's Graham, the OSH and analyst sources cited by bonk himself, and other known facts and sources, I say, I think OSH's additional stranded mountain and jungle gas would only make sense for a 4th, or maybe 5th, train, to come at a later date, after additional concept selection studies, drilling, testing, and initial certification. I think he has it backwards!
Why would anyone think Exxon is in no hurry and would wait for all that, rather than negotiating with IOC for resources that are much closer, more cost effective, and more "defined" and certain, as bonk obviously wants all to think, while Exxon and IOC have been negotiating for months for just that and appear to be on the verge of a binding contract?
