PNG LNG production surges 20% above nameplate capacity in Jan-Mar: Oil Search
Papua New Guinea’s LNG project continued to operate well above nameplate capacity during January-March 2017 and has ample feed gas to sustain the strong production levels, while discussions to increase capacity will take place later in the year, project partner Oil Search said Wednesday.
PNG LNG operated at an annualized rate of 8.3 million mt/year during the quarter, which is some 20% above the nameplate capacity of 6.9 million mt/year, said Australian-listed Oil Search, which is a 29% equity holder in PNG LNG.
“The recent independent recertification of the resources within the PNG LNG project fields has confirmed that there is more than sufficient gas available to support this higher level production and will enable the project to optimally place additional volumes in either term contracts (for uncommitted production above 6.6 million mt/year) and/or the spot market, subject to achieving suitable terms and conditions,” Oil Search said.
It will be for volumes above 6.6 million mt/year, rather than the current nameplate capacity of 6.9 million mt/year, because that was what the project’s capacity was thought to have been when it was first sanctioned in 2009, a spokeswoman for Oil Search said.
The recertification resulted in a 50% increase in the company’s proven PNG LNG gas reserves compared to the 2015 reserve booking, which is equivalent to a 2.8 Tcf increase on a gross basis, Oil Search said.
Operator ExxonMobil recently commenced marketing up to 1.3 million mt/year from the PNG LNG project, Oil Search said.
National and local elections in PNG are due to take place in June/July this year and Oil Search said it will discuss its expansion plans with the new government.
“Over the 87 years we have operated in PNG, we have fostered strong relationships with many governments. We look forward to working with the new government when it is formed in August, with discussions regarding LNG expansion expected to be high on the government’s agenda,” Oil Search said. RBC Capital Markets analyst Ben Wilson said that once the election is concluded, there is expected to be “rapid progress” towards a formal structure for expansion.
PNG LNG is a two-train integrated LNG project operated by ExxonMobil PNG Limited, which has a 33.2% interest. Other partners are Santos (13.5%), National Petroleum Company of PNG (16.8%), JX Nippon Oil & Gas Exploration Company (4.7%), Mineral Resources Development Company (2.8%), as well as Oil Search (29%).
Oil Search said its net production from the project was 26,299 MMcf during Q1 2017, which compares to 25,819 MMcf in the year-ago quarter, and 26,560 MMcf during October-December.