Currently the PNG LNG joint venture plans to build a two-train 6.3MMtpa liquefaction plant on a large site 20km from Port Moresby, with gas sourced from various Oil Search gas and oil fields in PNG.
For a third 3.15MMtpa train Oil Search said it would need an extra 3.5-4 trillion cubic feet of gas but sufficient 2P (proven and probable) reserves already exist in the company's licences.
In 2P reserves of the PNG LNG project fields the company already has 9.3tcf, while 3P (proven, probable and possible) reserves equate to 15tcf with the major Hides field having almost 10tcf of that figure.
In a three-pronged attack Oil Search is seeking to increase its contractable gas resource, chiefly though exploration, then to consider the highest value development options and finally to put its extra gas into development, consisting of future company projects and additional capacity for PNG LNG.
Exploration
Oil Search is finalising its 2009-11 drilling program which is targeting in excess of 13tcf of gross resource with a 15% possibility of success.
At this stage the company said it is likely to have one rig dedicated to exploration and another for appraisal drilling with operations starting in the second half of 2009.
Oil Search is aiming to start offshore drilling in licences in the Gulf of Papua in 2010 with seismic planned for next year.
From exploration Oil Search wants to have a sufficient resource definition at least in 2011 to progress gas growth projects.
To help meet this timeline Oil Search said it is "considering a range of farm-ins/judicious farm-downs with strategic partners".
Gas development options
The PNG mainstay said gas options will be progressed as its resource is proven up, but choices will be made in the 2010-11 period.
Aside from PNG LNG possibly having four trains, the company is considering gas-to-liquids options on the back of growing global demand for clean transport fuels and favourable Asian diesel and naphtha commodity pricing.
The company considers methanol production as a cornerstone of petrochemical development opportunities.
Oil Search said a plant of around 1.5MMtpa is likely while downstream investment by the company is unlikely.
Other options for extra resources include compressed natural gas, gas supply for mining operations such as extending the mine life of Barrick Gold's major Porgera mine and power generation projects to help PNG industry and communities.
Concerning the latter, Oil Search has signed a memorandum of understanding with the PNG government for exploitation of its gas that is not slated for PNG LNG, which equates to about 1.6tcf of 2P plus associated liquids.
PNG LNG
Project operator and 41.6% stakeholder ExxonMobil is overseeing the front-end engineering and design phase of the project and the final investment decision is expected by late 2009.
The JV is aiming for first cargoes to hit Asian markets in late 2013 or early 2014 and Oil Search considers the project to be the next LNG development for the Asia Pacific region.
Other stakeholders include Santos 17.7%, AGL Energy 3.6% and Nippon Oil 1.8% while landowner interests hold the remaining 1.2%.
These interests are subject to change once the PNG government steps on board to the project (around 19.4%) and the gas interests have been fully calculated.
