Horizon Oil CEO Brent Emmett, when speaking to senior oil and gas industry executives at the recent RIU Good Oil Conference in Perth recently, said PNG is a pro development jurisdiction with an excellent track record of delivering major projects.
Mr Emmett said it is also located in close proximity to the growing LNG markets of South East Asia which makes it an attractive place to invest in.
He was updating the industry on Horizon Oil’s proposed Western LNG project, which seeks to aggregate a number of Western Province gas fields to develop 2.0 to 2.5 trillion cubic feet of gas and 60 to 70 million barrels of condensate.
The aim is to export the gas and condensate via pipeline and an offshore LNG facility which will have a capacity of around 1.5 million tonnes per annum.
Crucially, the resources slated to participate in Western LNG are held by only six participants, with almost 70 per cent concentrated in the hands of just two parties – Horizon Oil of Australia, and the Spanish major Repsol.
“This consolidation of ownership is important as it will make the process of development planning and aggregation simpler than if you were working with a widely dispersed ownership group” said Emmett.
He believes the LNG market is becoming rapidly aware of the potential of smaller LNG developments.
“We’re not really seeking out the traditional large scale LNG customers and we’re not competing with the large scale LNG producers.
“We see strong demand growth for LNG in emerging South East Asian economies, particularly in relation to dispersed power generation, and this is largely being driven by new entrants who want greater flexibility of supply.
“We regard PNG as something of a sweet spot from which to meet those needs.”
“Western LNG is targeting start up in the early 2020s when it is anticipated that the South East Asian markets will be undersupplied with LNG.
While focusing on export markets, “a key component of our development criteria is making sure that our development plan maximises the potential for domestic PNG market access for gas and LPG” said Emmett.
The design concept provides multiple gases off take points for local industrial consumers and power generation.
According to Emmett, preliminary economics are attractive and Western LNG, if successful, will be expected to generate around US$1 billion a year for 20 years or more.
“We’re in pre-Front End Engineering and Design now and anticipate proceeding into Front End Engineering and Design next year with a Final Investment Decision scheduled for 2019,” Mr Emmett said.