P’nyang field provides for gas expansion

The undeveloped P’nyang gas field is poised to underpin the expansion of the PNG LNG Project, as well as provide natural gas for power generation.

In three different statements released by ExxonMobil PNG Limited as operator of the PNG LNG Project, Oil Search Limited as partner and Prime Minister Peter O’Neill respective over the weekend, all suggest that there is definitely an expansion of the current LNG project.

Last week, ExxonMobil and the State announced the signing of an agreement (MoU) with respect to the expansion of the PNG LNG Project.

According to a statement released by Oil Search yesterday, under the MoU, the PNG LNG Project will supply electricity and gas for domestic power generation, providing a reliable and clean source of energy to support PNG’s urgent power needs.

The agreement details the provisions for an LNG expansion project, including the award of a petroleum development licence (PDL) and associated pipeline licences for the P’nyang gas field in PRL 3 (Oil Search – 38.51%).

Oil Search yesterday made it clear that there is going to be a third gas train in addition to the current two trains at the plant site outside Port Moresby though ExxonMobil was reluctant to confirm yesterday when asked whether the most speculated third train is certain or not since P’nayng is about to be granted a PDL, which has been suggested for a while as a determining factor for an expansion of a third train.

As stated, "P’nyang will provide additional long-term gas reserves for power generation and Project expansion, including expected debottlenecking of the existing trains and a third LNG train."

Oil Search says the MoU sets out an agreed timeline between the PRL 3 co-venturers and Government to a final investment decision for an additional LNG train.

"The commitment from the PRL 3 owners is for the sanction of the third train in the earliest timeframe, subject to completion of typical activities including appraisal, marketing, financing and development engineering on P’nyang. Under the agreement, a final investment decision is to be taken by the end of 2017 at the latest," part of the statement read.

The second largest partner said the PRL 3 licencees are in the process of finalising the PDL application for P’nyang which, under the MoU timeline, is expected to be offered by the end of the first quarter of 2015.

It was reported that preparations are underway for appraisal drilling and development engineering studies, which will commence this year.

Oil Search is currently updating its resource estimate for P’nyang. Preliminary interpretation of recently acquired data has indicated a larger resource base than currently booked, which is providing confidence that the field can underpin the expansion train.

The commitment under the MoU to near-term appraisal drilling will be undertaken to better quantify 1C contingent resource volumes.

Oil Search’s managing director, Peter Botten said, "we are delighted that ExxonMobil, as operator of the PNG LNG Project and PRL 3, has signed this MoU.

This agreement meets the needs of all stakeholders. It will deliver much needed power to the people of PNG and provides an agreed timeline and activities for an expansion train at PNG LNG supported by P’nyang, a major gas field which is a key growth asset in Oil Search’s portfolio.

"The arrangement supports the PNG Government’s vision to improve the delivery of long-term, reliable and accessible power in PNG. Importantly, it demonstrates how LNG developments, such as the PNG LNG Project, can deliver both substantial export revenues and gas-for-power solutions to the local economy, for the benefit of all of PNG. Oil Search will continue to work with, and support, the Government to deliver an integrated power solution for the nation," Mr Botten added.

ExxonMobil Communication advisor Rebecca Arnold said, "however, there is still much work to be done to firm up the field."

Ms Arnold when asked whether there was any provision made to supply gas to Port Moresby in the 2008 May 22 Gas Agreement, she responded, "in the original Gas Agreement, provisions were made for a supply of gas (4mscfd) for Hides. This is an existing agreement. This recent announcement of the MoU signed between ExxonMobil PNG Limited and the PNG Government builds on this, and allows for the provision of natural gas and power for PNG Power to supply electricity to Port Moresby.

This is beneficial to the people of Port Moresby and supports the Government’s plans to improve the capacity and reliability of the country’s power supply," Ms Arnold said.

Further queried to ascertain which party bears the cost implication of gas supply, she stated, "this will be supplied to PNG Power at a cost that is more economical than, say, diesel."

However, additional queries to IPBC and PNG Power for the rationale behind selecting Port Moresby alone for a 20 year period while the rest of the country is yet to be lit up by PNG Power and while the country is celebrating 40 years were unanswered.

Source: Post Courier
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