South Pacific: Papua New Guinea

SOUTH PACIFIC

Papua New Guinea

This country supplies its developing energy needs with 70,000 bpd crude and condensate production from 36 producing wells (2000), plus 320 MMcfd gas production from only two reported producers. It expects to drill five wells this year, all onshore. These modest figures understate the rich gas reserve in the Papua basin (PB), from the shallow waters of the Gulf of Papua, northeast toward the center of the country. There, several large structures such as Hides, with 6.0 Tcf reserves (as conservatively estimated by Wood Mackenzie), Kutubu (1.5 Tcf), Moran (350 Bcf), Barikewa (390 Bcf) and Gobe Main (200 Bcf), and others, offer a major reserve waiting to be developed when a market is established. The Department of Petroleum and Energy (DPE) officially pegs total reserves at 16.9 Tcf. The major project overhanging further development is the proposed PNG to Queensland (Australia) pipeline, which would supply the needed market.

PNG hosts no formal licensing rounds; contracts are arranged on a bilateral basis with the government. Virtually all activity is onshore. In the last three quarters of 2000 and first quarter 2001, only three new licenses were awarded. The Oil Search / Woodside JV acquired PPL 218, onshore PB. PPL 219 (formerly PPL 161), onshore PB, was awarded to the Chevron operated group, also comprising Oil Search, ExxonMobil, Orogen Minerals and Merlin Petroleum. InterOil was awarded PPL 220, onshore PB, to the north of the Gulf, to conduct airborne gravity / magnetics followed by seismic. The permit is close to the proposed gas pipeline route, and the operator is proposing to build an oil refinery in Port Moresby to handle 32,500 bopd.

Applications were received in 2000 for four prospective PB areas: SPI Exploration & Production (APPL 223); Drillsearch Energy (APPL 224); and Hood Energy Development (APPLs 221/222). In other changes, Drillsearch farmed into two PB permits (PPL 179/200). And Worldwide Gold Resources relinquished PPLs 186/187, on / offshore PB.

Exploratory drilling was very limited in the last three quarters of 2000 and first quarter 2001. In fact, the only reported completions by Wood Mackenzie were two dry-hole wildcats Anama 1 and Dua Dua 1 drilled by Oil Search on PPL 188 and PPl 179, respectively in 20 – 25-ft water just off the coast in the Gulf, using the Ensco 50 jackup. These were the first offshore wells in PNG since 1992. DPE officially reports three offshore wells drilled in 2000, of a total eight for the entire country.

No physical development has been reported for the $3.5 billion proposed project to lay a 2,000-mi-long pipeline from the Hides / Kutubu / Gobe area, south across the Gulf of Papua to Bamaga, Queensland, then SE to Gladstone, 290 mi NNW of Brisbane. Chevron has been operator of the project since 1996, and developed the present concept, basically onshore-based gas export with provisions for LPG extraction offshore, likely from a gravity-based platform, presumably for liquid marketing via tankers.

Project design / management has involved combining various participating licensees’ properties in the area to assure adequate, 30-year reserves. Aggregated fields so far include Hides, Kutubu, Gobe and Moran. In mid-2000, the Queensland government released a critically needed Energy Policy Paper to help ensure a role for gas in the state’s energy mix. A landholder ownership dispute with the government temporarily halted oil production from Moran field in early 2001. It is not known how this affects pipeline project planning.