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Oil Search has entered into an agreement with ExxonMobil to farm-in to acreage in the onshore Papuan Gulf basin in Papua New Guinea (PNG) which has the potential to support the expansion of its liquefied natural gas (LNG) portfolio in PNG.

The company will acquire 30% interest in each of the petroleum prospecting licenses (PPL) 474, 475, 476, 477, and 39 from ExxonMobil.

ExxonMobil acquired interests in these licenses when it completed its purchase of InterOil Corp. in early 2017.

The licenses are located in the Eastern Foldbelt, adjacent to the Elk-Antelope field in PRL 15, containing the Triceratops, Bobcat and Raptor discoveries.

As part of the proposed farm-in arrangement, Oil Search will undertake a seismic acquisition program over the permits this year and early 2018.

Due to the increase in activities the company said it will revise its exploration and appraisal budget from US$250-300 million to $270-320 million.

“Prior to our proposed bid for InterOil in 2016, Oil Search identified the onshore Papuan Gulf basin as an area with not only discovered gas resources but also significant further gas potential,” said Peter Botten, managing director, Oil Search.

“The onshore Gulf licenses are in close proximity to the Elk-Antelope fields in PRL 15, which are expected to underpin the Papua LNG development, providing a potential route for future commercialization,” he added.

In PNG, Oil Search has stakes in two LNG developments. Operated by ExxonMobil, the firm has 29% interest in the US$19 billion PNG LNG project which commenced operations in 2014 and is a major supplier of LNG to customers in Asia.

In 2016, PNG LNG produced 7.9 MT of LNG an increase of 14% from the original design specification of 6.9 MT.

Oil Search also holds 23% interest in PRL 15, operated by Total. The permit is home to the Elk-Antelope gas field, an anchor field for Total's proposed Papua LNG development.

Scheduled begin construction in 2018, Papua LNG includes exploring Elk-Antelope; an LNG plant located adjacent to the PNG LNG site; a central processing facility; and approximately 75km onshore and 265km offshore pipelines. 

Image: Oil Search employee / Oil Search

Sunday, 21 May 2017 21:15

AWE spuds Waitsia-3

Australian energy company AWE has commenced drilling the Waitsia-3 appraisal well, which is the first of a two-well appraisal drilling program planned for the Waitsia field in 2017.

Located in Western Australia’s onshore Perth basin, the well will be drilled to a planned maximum total depth of 3706 m and is forecast to take approximately seven weeks to complete.

It is designed to appraise the gas potential in the southern extension of the Waitsia field, with primary targets being conventional reservoirs in the Kingia and High Cliff sandstones.

According to CEO David Biggs, Waitsia-3 and Waitsia-4 will be the last appraisal wells drilled prior to a final investment decision (FID) for the Waitsia Stage 2 full field development. Both wells are expected to be completed as production wells if results are positive.

He noted that AWE will review its reserves and resources for the field at the completion of the two well drilling program and prior to a FID, and confirmed that Stage 1A of the Waitsia gas project exceeded pre-drill expectations

“Excellent performance from multiple zones in the Senecio-3 and Waitsia-1 wells has confirmed a high-quality conventional reservoir system in the Kingia and High Cliff Sandstones with excellent connectivity,” Biggs said.

“Waitsia Stage 1A supplies a maximum daily quantity of 9.6 TJ/d under a 2.5 year take or pay agreement with Alinta. The gas from Stage 1A is produced via the Xyris production facility and delivered into the Parmelia pipeline where it is blended with gas from Beharra Springs to ensure it remains within pipeline specification for CO2.

“The quality of produced gas from the Waitsia field is very good with insignificant levels of inerts present. Methane constitutes 93% of produced gas and CO2 levels remain within our estimated range of 4-5%. This implies only minimal processing, such as simple CO2 extraction, will be required for Stage 2,” he continued.

“Pre-front end engineering and design (FEED) work for Stage 2 full field development is nearing completion and the joint venture will be in a position to commence FEED from June. The first term sheet for Stage 2 gas sales was agreed with AGL in February and we are aiming to contract substantial gas volumes in 2017 ahead of FID.”

The Waitsia gas project is a 50:50 joint venture between AWE (operator) and Origin Energy. Discovered in September 2014, the Waitsia field has the capability to supply the domestic market with 100 TJ/d for 10 years from conventional reservoirs.

The Waitsia-3 appraisal well is located approximately 19.8km east-south-east of Dongara, and 10.8km south of Waitsia-1. The approved work program for the Waitsia-3 appraisal well does not include hydraulic fracture stimulation.

Stage 1A of the Waitsia gas project commenced production in August 2016 from the Senecio-3 discovery well and the Waitsia-1 appraisal well. An independent review of Stage 1A well performance by RISC Advisory has determined that preliminary results from the two zones under test at both wells indicate an accessed gas in place volume of approximately 100 Bcf or greater.

Image: AWE onshore Perth basin / AWE

Thursday, 18 May 2017 22:28

Origin to sell Queensland pipeline

Australian gas supplier Origin Energy has entered into an agreement with Jemena Gas Pipelines Holdings, to sell its Darling Downs pipeline network for AU$392 million.

Jemena is an energy infrastructure company jointly owned by State Grid Corp. of China and Singapore Power.

Origin said this transaction lifts sales from its asset divestment program announced in September 2015 to $1 billion, considerably higher than the original $800 million target.

Located in Queensland, the Darling Downs pipeline is responsible for the transportation of gas to Origin’s Darling Downs power station, the Australia Pacific LNG (APLNG) project and the domestic market.

Under the terms of the sale agreement, Origin has secured gas transportation services on the pipeline network for periods ranging from 10-30 years.

CEO Frank Calabria said the sale is scheduled to be completed by 30 June and puts the company on track to achieve adjusted net debt of well below $9 billion. 

“In addition, we continue to make good progress on the divestment of Origin’s conventional upstream business, Lattice Energy, during calendar 2017,” he added.

Last December, Origin announced its intention to divest its conventional upstream business – Lattice Energy - via initial public offering, to reduce debt and focus on its Energy Markets business and Integrated Gas business.

Lattice Energy includes the group’s gas projects in the Otway, Bass, Perth, Cooper, and Bonaparte basins in Australia, and stakes in the Kupe gas project and the Canterbury basin in New Zealand. Origin will retain its interests in APLNG, Ironbark and the Browse and Beetaloo basins.

During the March 2017 quarter, Origin recorded production of 79.7 PJe, a 31% increase on the corresponding period in FY2016. This was primarily driven by the commencement of production from APLNG’s second train. The project shipped 27 LNG cargoes during the period.

Revenue amounted to $562.9 million, a 78% increase year-on-year, due to higher production volumes and higher average commodity prices. 

Image: Origin 

Tuesday, 16 May 2017 20:43

Petronas, Gas4Sea partners ink LNG MoU

Petronas through its subsidiary Petronas LNG Ltd. (PLL) and its shipping affiliate MISC Berhad (MISC) inked a non-binding memorandum of understanding (MoU) with Gas4Sea partners to explore collaboration in promoting liquefied natural gas (LNG) as the preferred marine fuel.

Gas4Sea, comprising of Engie, Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha is a partnership created to jointly promote LNG as the cleaner maritime fuel, by providing LNG bunkering services in the global market.

Under the terms of the MoU, the parties will explore ways to collaborate and identify potential business opportunities in relation to LNG bunkering.

Commenting on the MoU, PLL chief marketing officer and CEO Ezhar Yazid Jaafar said that the collaboration is expected to enhance Petronas’ strong presence in the integrated LNG value chain and diversified LNG market portfolio.

“Petronas is looking at ways to further promote the consumption of LNG beyond the existing markets portfolios, and advocating LNG as marine fuel is a new frontier for the LNG sector,” he said.

“In addition, this collaboration will also support the usage of LNG as a fuel of choice for maritime activities, which is in line with Petronas effort in helping the industry reduce its carbon footprint.”

Gas4Sea partners are major players in the energy and global shipping industries. With their first purpose-built LNG bunkering vessel based in the port of Zeebrugge in Belgium, they are equipped with a key piece of the LNG bunkering value chain to extend the reach of LNG to fuel the marine transportation sector.

Petronas, on the other hand, has diversified its LNG supply portfolio in recent years with the addition of its first floating LNG facility, PFLNG Satu, located offshore Sarawak, and gained 27.5% interest in Australia's Gladstone LNG project in Queensland. 

Built to maximize the potential of remote and stranded gas reserves, PFLNG Satu achieved first gas from the Kanowit field in November 2016 and produced its first drop of LNG in December 2016. This was followed by first cargo to a South Asian market in April. 

Image: Petronas and Gas4Sea at MoU signing / Petronas