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PNG LNG Project Expansion

With the successful delivery of the PNG LNG Project in 2014, Oil Search and its PNG LNG co-venturers are seeking opportunities to leverage existing infrastructure and skills developed through the foundation project.  Production optimisation/debottlenecking offers the potential to add material incremental value to the Project. In addition, as the existing pipelines and infrastructure at the PNG LNG plant site have the capacity to accommodate a third LNG train with minor additional investment, the addition of a third, brownfield, LNG train offers a potential high-return growth opportunity.

While there are a range of potential gas supply sources, expansion is expected to be underpinned primarily by the P’nyang gas field in PRL 3.

P’nyang gas field

The P’nyang gas field, located 120 kilometres north-west of Hides in the Western Province, was discovered in 1990. Appraisal activities on the field, including drilling in 2012 and the acquisition of seismic data in 2013, has identified potential material gas resource upside above Oil Search’s current 2C estimates of 2.6 tcf. Further appraisal drilling is planned on the field in 2016, which will help quantify the potential proved (1C) and proved and probable (2C) contingent resource upside.

In January 2015, a significant milestone was reached, when ExxonMobil PNG Limited, as operator of the PNG LNG Project and PRL 3, signed a Memorandum of Understanding (MoU) with the PNG Government regarding the development of P’nyang to support PNG LNG Project expansion (including debottlenecking of existing trains and a potential third LNG train) and for domestic power generation. The MoU also provided for the award of a petroleum development licence (PDL) and associated pipeline licences for the P’nyang field.

The MoU includes an agreed timeline for the development of P’nyang, with a final investment decision for the potential construction of a third train at PNG LNG, underpinned by gas from P’nyang, targeted for 2017.

PRL 3 participants

ExxonMobil PNG Limited (operator) 49.0%
Oil Search 38.5%
JX Nippon 12.5%

PNG LNG Project fields

Potential 1P and 2P gas reserves upside also exists within the existing Project gas fields, most notably in the Hides gas field. As part of the PNG LNG Project development, nine development wells have been drilled and completed as producers in the Toro/Digimu reservoirs, while a produced water disposal well has also been drilled.

The results of the development wells on Hides have been largely consistent with expectations, with the wells exhibiting good pressure communication and excellent reservoir productivity. Drilling and production data from the development wells will be used to further delineate the volume and distribution of Hides gas reserves.

The gas resource evaluation activities planned at P’nyang and Hides will provide greater certainty around the North-West Highlands resource. Given the opportunity to leverage the existing infrastructure and operational platform, Oil Search believes that PNG LNG Project expansion opportunities will be highly value-accretive.