Key Data:
Plant location
Port Moresby, Papua New Guinea
Products
LNG, LPG and condensate
Plant start-up
2013-14
Production
Two trains with a combined capacity of 6.6 million tonnes per year
Estimated project cost
$15bn
Key Players:
Operator
Esso Highland
Partners
ExxonMobil 41.6%, Oil Search (Australian oil and gas producer) (34.1%), Santos (17.7%), AGL (3.6%) Nippon Oil (1.8%) and Mineral Resource Development Corporation / State (1.2%)
Financial
Merrill Lynch Global Commodities (Europe), Pacific LNG
Contractor
InterOil, ACIL Tasman, Bechtel, ConocoPhilips
The Papua New Guinea liquefied natural gas (PNG LNG) project is a new gas project being championed by ExxonMobil to maximise the advantage from three large gas discoveries in the southern and western highlands of PNG.
The new gas discoveries are the Hides, Angore and Juha gas fields, which are likely to have reserves approaching three to four trillion cubic feet. The three fields will supply gas for the Asian market via a pipeline to a two-train LNG facility to be constructed at Napa Napa near Port Moresby.
The project will be underpinned by Interoil's Elk / Antelope field infrastructure (not yet fully proven). The facility will be supplied using a 36in (910mm) natural gas pipeline.
It is believed that there could be a further two trillion cubic feet of gas or 400 million barrels of oil equivalent waiting to be discovered in PNG and this could require a phase II development of a third LNG train in the future.
LNG cargoes are due to start in 2013-14. The PNG LNG project will have a lifespan of about 30 years (until 2043).
In October 2009, the environmental impact assessment report on the LNG project submitted by ExxonMobil was approved by the PNG government. The approval has paved way for the clearance of final environmental management plan required to go ahead with the construction.
Esso Highlands, a subsidiary of ExxonMobil, has already awarded a contract to build a liquefaction plant to engineering and construction company Clough Curtain JV in June 2009.
PNG LNG project
The project will be based around a two-train LNG liquefaction facility based near Port Moresby and capable of handling 6.6 million tonnes of LNG a year.
ACIL Tasman has been contracted to prepare reports on the environmental impact and also the economic impact of the project for PNG.
InterOil completed the pre-front-end engineering and design (FEED) preliminary engineering and evaluation design work for the project in April 2007. The dual-train facility will be constructed adjacent to the InterOil refinery at Port Moresby in the Gulf of Papua to share infrastructure. The FEED work for the project was awarded to Bechtel in March 2008 with an option to continue the project into the EPC phase.
The plant will use ConocoPhillips technology (used by over 50% of LNG plants worldwide). Their proprietary natural gas liquefaction technology, which is based on the optimised cascade (SM) process, will be central to the two trains. FEED was started in early 2009 (establishing environmental considerations to meet the equator principles, equipment required, cost estimates and preliminary long-lead time equipment enquiries).
The LNG facility will have a 2.3km trestle for loading tankers, two 125,000m³ LNG storage tank, LPG recovery systems and two 50,000-barrel condensate storage tanks.
It will be supplied by a 716km gas pipeline, 417km of which will be subsea and 36in (Kopi on the coast is 450km from Port Moresby), while the onshore 265km section will be 32in.
The pipeline will link to the Hides gas conditioning plant (906 million cubic feet a day) and the Juha production facility (250 million cubic feet a day).
Between the Juha and Hides facility there will be a 14in gas pipeline and an 8in liquids pipeline for condensate.
The condensate will be handled at the existing Kutubu and Agogo processing plant and exported from the existing Kumul platform on the coast (the gas produced as a byproduct from these facilities will be returned to the LNG pipeline).
The LNG project will be led by Liquid Niugini Gas who are a group of experts assembled by project partners InterOil, Merrill Lynch Global Commodities (Europe) and Pacific LNG.
The project partners signed an agreement, in November 2009, for the supply of 2 million tonnes of LNG annually to Unipec Asia Co Ltd, a subsidiary of Sinopec Corp.
Finance and shareholdings
The project was initially estimated to require around $9.5bn in investment over the 30-year lifetime of the project. The project cost will be reassessed and declared in late 2009. The development of the Hides, Juha and Angore gas fields, together with a pipeline to the coast, may cost US$5bn, while the LNG plant could cost $4.5bn.
The financial closure for the project is expected in 2010 and the sovereign funds have not been affected by the US subprime financial crisis. The initial phase of the project was expected to involve an investment of $100m.
In October 2009, the project cost for phase one of construction of facilities was announced to be around $15bn. The cost escalation occurred due to increased provision for contingency and $600m as pre-start-up capitalised operating cost and due to other revised expenses. The final investment decision along with FEED is expected to be announced by end of 2009.
The project's main shareholder is ExxonMobil (Esso Highlands will be the operator) at 41.6% and other shareholders include: Oil Search (Australian oil and gas producer) (34.1%), Santos (17.7%), AGL (3.6%), Nippon Oil (1.8%) and Mineral Resource Development Corporation / State (MRDC) (1.2%) – the land owners.
The PNG government has retained the right to take a 22.5% stake in the Hides, Angore and Juha gas fields, which could result in state participation in the LNG venture of around 19% (other shareholdings will be reduced to accommodate this).
A joint operating agreement was signed between Government of PNG and project consortium in March 2008 prior to the FEED work of the project starting. The PNG Parliament was for investigating the due diligence of the project since opposition MPs have expressed doubts that PNG will benefit significantly from the project if it ties into protected price contracts.
Liquid Niugini Gas has been working closely with the government on the project since March 2006. The deal closed in late 2008 andconstruction work began in 2009.
Exxon Mobil Corporation subsidiary Esso Highlands Ltd is seeking to raise funds and was working towards a final investment decision in 4Q 2009 with a corresponding first LNG cargo in late 2013-14.
"We are delighted to host this initial fact-finding visit to PNG for potential lenders," said PNG LNG project venture manager Peter Graham. "The project co-ventures are highly motivated to move forwards and the PNG Government has been very supportive.
"We believe the lenders will recognise the project has several key attributes including high-quality resources, a world-class operator and strategically aligned sponsors, PNG's stable investment climate and the Project's commitment to sound environmental and social outcomes."
By the fiscal stability agreement the State of Papua Guinea guaranteed the fiscal stability of the project. Executed in April 2009, the fiscal stability agreement is between the State of PNG and Project Co-Venturers. It includes applicability and rates of taxes, duties, fees and other fiscal imposts payable by the project. - hydrocarbons-technology.com
The new gas discoveries are the Hides, Angore and Juha gas fields, which are likely to have reserves approaching three to four trillion cubic feet. The three fields will supply gas for the Asian market via a pipeline to a two-train LNG facility to be constructed at Napa Napa near Port Moresby.
The project will be underpinned by Interoil's Elk / Antelope field infrastructure (not yet fully proven). The facility will be supplied using a 36in (910mm) natural gas pipeline.It is believed that there could be a further two trillion cubic feet of gas or 400 million barrels of oil equivalent waiting to be discovered in PNG and this could require a phase II development of a third LNG train in the future.
LNG cargoes are due to start in 2013-14. The PNG LNG project will have a lifespan of about 30 years (until 2043).
In October 2009, the environmental impact assessment report on the LNG project submitted by ExxonMobil was approved by the PNG government. The approval has paved way for the clearance of final environmental management plan required to go ahead with the construction.
Esso Highlands, a subsidiary of ExxonMobil, has already awarded a contract to build a liquefaction plant to engineering and construction company Clough Curtain JV in June 2009.
PNG LNG project
The project will be based around a two-train LNG liquefaction facility based near Port Moresby and capable of handling 6.6 million tonnes of LNG a year.
ACIL Tasman has been contracted to prepare reports on the environmental impact and also the economic impact of the project for PNG.
InterOil completed the pre-front-end engineering and design (FEED) preliminary engineering and evaluation design work for the project in April 2007. The dual-train facility will be constructed adjacent to the InterOil refinery at Port Moresby in the Gulf of Papua to share infrastructure. The FEED work for the project was awarded to Bechtel in March 2008 with an option to continue the project into the EPC phase.
The plant will use ConocoPhillips technology (used by over 50% of LNG plants worldwide). Their proprietary natural gas liquefaction technology, which is based on the optimised cascade (SM) process, will be central to the two trains. FEED was started in early 2009 (establishing environmental considerations to meet the equator principles, equipment required, cost estimates and preliminary long-lead time equipment enquiries).
The LNG facility will have a 2.3km trestle for loading tankers, two 125,000m³ LNG storage tank, LPG recovery systems and two 50,000-barrel condensate storage tanks.
It will be supplied by a 716km gas pipeline, 417km of which will be subsea and 36in (Kopi on the coast is 450km from Port Moresby), while the onshore 265km section will be 32in.
The pipeline will link to the Hides gas conditioning plant (906 million cubic feet a day) and the Juha production facility (250 million cubic feet a day).
Between the Juha and Hides facility there will be a 14in gas pipeline and an 8in liquids pipeline for condensate.
The condensate will be handled at the existing Kutubu and Agogo processing plant and exported from the existing Kumul platform on the coast (the gas produced as a byproduct from these facilities will be returned to the LNG pipeline).
The LNG project will be led by Liquid Niugini Gas who are a group of experts assembled by project partners InterOil, Merrill Lynch Global Commodities (Europe) and Pacific LNG.
The project partners signed an agreement, in November 2009, for the supply of 2 million tonnes of LNG annually to Unipec Asia Co Ltd, a subsidiary of Sinopec Corp.
Finance and shareholdings
The project was initially estimated to require around $9.5bn in investment over the 30-year lifetime of the project. The project cost will be reassessed and declared in late 2009. The development of the Hides, Juha and Angore gas fields, together with a pipeline to the coast, may cost US$5bn, while the LNG plant could cost $4.5bn.
The financial closure for the project is expected in 2010 and the sovereign funds have not been affected by the US subprime financial crisis. The initial phase of the project was expected to involve an investment of $100m.
In October 2009, the project cost for phase one of construction of facilities was announced to be around $15bn. The cost escalation occurred due to increased provision for contingency and $600m as pre-start-up capitalised operating cost and due to other revised expenses. The final investment decision along with FEED is expected to be announced by end of 2009.
The project's main shareholder is ExxonMobil (Esso Highlands will be the operator) at 41.6% and other shareholders include: Oil Search (Australian oil and gas producer) (34.1%), Santos (17.7%), AGL (3.6%), Nippon Oil (1.8%) and Mineral Resource Development Corporation / State (MRDC) (1.2%) – the land owners.
The PNG government has retained the right to take a 22.5% stake in the Hides, Angore and Juha gas fields, which could result in state participation in the LNG venture of around 19% (other shareholdings will be reduced to accommodate this).
A joint operating agreement was signed between Government of PNG and project consortium in March 2008 prior to the FEED work of the project starting. The PNG Parliament was for investigating the due diligence of the project since opposition MPs have expressed doubts that PNG will benefit significantly from the project if it ties into protected price contracts.
Liquid Niugini Gas has been working closely with the government on the project since March 2006. The deal closed in late 2008 andconstruction work began in 2009.
Exxon Mobil Corporation subsidiary Esso Highlands Ltd is seeking to raise funds and was working towards a final investment decision in 4Q 2009 with a corresponding first LNG cargo in late 2013-14.
"We are delighted to host this initial fact-finding visit to PNG for potential lenders," said PNG LNG project venture manager Peter Graham. "The project co-ventures are highly motivated to move forwards and the PNG Government has been very supportive.
"We believe the lenders will recognise the project has several key attributes including high-quality resources, a world-class operator and strategically aligned sponsors, PNG's stable investment climate and the Project's commitment to sound environmental and social outcomes."
By the fiscal stability agreement the State of Papua Guinea guaranteed the fiscal stability of the project. Executed in April 2009, the fiscal stability agreement is between the State of PNG and Project Co-Venturers. It includes applicability and rates of taxes, duties, fees and other fiscal imposts payable by the project. - hydrocarbons-technology.com