PNG to host new LNG export project

An upcoming project in Papua New Guinea has been christened ‘Papua LNG’ in recognition of the importance that the Gulf and Central provinces play in the resources development of PNG.

Papua LNG came about after French energy company Total acquired a 40.13 per cent interest on licence PRL-15 from InterOil. The joint venture comprises Total, InterOil and Oil Search.

The central processing facilities for the Elk-Antelope field, on which the Papua LNG project is based, will be near the Purari River in the Gulf Province – about 360 km northwest of Port Moresby, and will be connected to an LNG facility by onshore and offshore gas and condensate pipelines.

Caution Bay near Port Moresby has been selected as the site for PNG’s second LNG plant, co-located with the existing PNG LNG project’s export and liquefaction facility.

“It is an important acquisition that fits well with our LNG strategy post-2017 and is another opportunity for Total to grow in Asia Pacific, following our participation in Australian projects Gladstone LNG and Ichthys LNG,” Total E&P PNG Managing Director Philippe Blanchard says.

Total’s current focus is on finalising the appraisal of the Elk-Antelope field to determine the precise amount of resources and to properly size the different facilities before moving on to the front-end engineering design (FEED) phase. In parallel, development studies as well as environmental and baseline studies are progressing – following the selection of main infrastructure sites in mid-2015.

Location, location

Mr Blanchard says the selection of Caution Bay and Purari River as the key infrastructure sites came down mostly to one factor: cost competitiveness.

“Both from technical and cost perspectives, it made sense to select a site on PRL-15 to host the upstream gas facility that is close to the river. This limits the logistics costs during construction and production phases.

“The location of the LNG plant on Caution Bay, near Port Moresby, allows us to explore synergies with other projects.”

Project challenges

Mr Blanchard says one of the foremost challenges in getting the project up and running is delivering a competitive project amid the current gas environment.

“When you are dealing with multibillion dollar developments like Papua LNG, you need to be sure that you have optimised the costs of your development as well as the financing of your project and the marketing of the gas.”

The second challenge Total faces is overcoming the hurdle of providing energy in a way that is efficient and acceptable to both community members and key stakeholders.

“We do recognise that it is a difficult balance to strike, but it is our worldwide mandate to be ‘committed to better energy’.

“Local communities have huge expectations from this project in terms of impact – benefits, infrastructures, employment – and they want it now. However, it is going to take some time before construction kicks off, revenues are generated and full benefits reach communities.”

Community consultation key

As part of its obligations, Total has launched awareness campaigns as well as preliminary environmental and social assessment processes to minimise the impact on communities surrounding the selected sites.

“We know that there are high expectations for major projects in PNG, so early stakeholders’ engagement and awareness campaigns will be extremely important to initiate from the beginning of the project,” Mr Blanchard says.

“We need to be sure that the local communities fully understand what a project of this kind can realistically deliver, in terms of its timing and its impact on them.”

As the Papua LNG project will take years to complete, Total is set to increase awareness campaigns and foster discussions within surrounding communities as the project progresses.

Both the Gulf and Central provinces that will be home to the project stand to benefit through jobs and training as well as investment in infrastructure such as health and education facilities.

Key development stages

The timeline for the key development stages of the project is linked to the end of the appraisal project, which is still ongoing.

Total is currently drilling the ANT-6 well and the joint venture is considering the possibility of drilling another appraisal well. It is currently using pressure mud cap drilling (PMCD) and downhole deployment valve (DDV) equipment to drill the reservoir section while adhering to optimum safety conditions.

“The more clarity we have on resources, the better for project economics and implementation,” Mr Blanchard says.

Although it is too early to say, Mr Blanchard believes there may be additional unexplored potential on the block.

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