Elk-Antelope appraisal flagged as PNG wealth maker

INTEROIL’S appraisal of the Elk-Antelope gas field in Papua New Guinea will provide key information for certification of the resource and the planning of a potential multi-train LNG development, the company has confirmed.
Elk-Antelope appraisal flagged as PNG wealth maker Elk-Antelope appraisal flagged as PNG wealth maker Elk-Antelope appraisal flagged as PNG wealth maker Elk-Antelope appraisal flagged as PNG wealth maker Elk-Antelope appraisal flagged as PNG wealth maker

CEO Dr Michael Hession said current drilling of the Antelope 4 appraisal well marked another key step in development of the gas field.

In a statement he said the well was designed to determine the southern extent of the Elk-Antelope reservoir while Antelope-5 would test its western boundary.

"The wells will provide key information for certification of the resource and for planning of a potential multi-train LNG development, which includes concept selection, basis of design and front-end engineering and design," he said.

"These wells are among up to eight exploration and appraisal wells that we expect to drill by the end of 2015.

"They reflect our commitment to explore our licences in the Eastern Papuan Basin to create maximum value for our shareholders and the people of Papua New Guinea.

"Independent estimates suggest more gas is yet to be found in the basin, which has yielded Papua New Guinea's largest undeveloped field in Elk-Antelope.

"The drilling campaign indicates how Papua New Guinea's oil and gas industry is maturing and providing opportunities for all Papua New Guineans.

"Wealth created by the LNG industry offers the chance for Papua New Guinea to invest as never before in the health and wellbeing of its citizens - something about which we are proud to play our part."

Meanwhile, Goldman Sachs has cut its growth expectations for global LNG demand.

While the investment bank previously forecast annual compound growth of 6% for LNG demand by 2020 and 5% by 2025, it recently reduced these estimates to 5% (2020) and 4% (2025) respectively.

The investment bank, with its analysts coming back from a recent "Asia LNG tour", said uncertainties to its forecasts included the pace of Japan's nuclear restarts, the extent of China's shale exploration and the pace of Southeast Asian demand growth.

"Several projects in Canada and Australia will likely face final investment decision deferrals due to high and uncertain costs, and price-sensitive buyers," Goldman said

While the bank viewed that the growing US LNG scene was altering the global LNG market with its Henry Hub-linked pricing and a more flexible source of supply, it also urged caution, saying it was probably too late to play the US LNG cycle.

"Given the substantial contracts that have been signed in the last couple of years with US LNG projects, we believe investors should seek exposure to low-cost LNG export capacity, and be realistic about expectations for further contracts."

Goldman also provided some of its LNG-related stock picks.

"We highlight buy-rated stocks within our global coverage which are exposed to LNG projects or shale plays at the lower end of the cost curve (eg Anadarko, BG Group (on Conviction List), ENI (CL), Galp, Inpex, Noble, Novatek, Ophir, Range Resources (CL), Santos (CL)).

"Our engineering and construction teams are now more cautious on LNG contract wins by E&C firms given the US award cycle is maturing, while capital expenditure reinvestment rates in other regions are at a peak and project returns are deteriorating."

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