Interoil

COMPANY PROFILE

2015

INTEROIL

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PNG: A country of reserves Editorial: Rosie DeWinter

The Elk-Antelope field, as it enters basis of design, represents a huge milestone for InterOil and a significant step in its strategy to discover and enable the development of hydrocarbons – whilst ensuring it is completed successfully with the right partners. “We’ve got a great partner in Total who is used to working in remote parts of the world and is a good technical operator and we’ve got Oil Search who have been in PNG for nearly 100 years and are part of the country’s first LNG project,” a spokesman for the company explains. “You don’t always get those ingredients coming together.”

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INTEROIL Earlier this year, the Elk-Antelope project, located in Papua New Guinea, took a big and significant step forward and following the decisions for project name and site selection, it entered basis of design.

Joint venture partners - Total, InterOil and Oil Search – came to a unanimous decision and agreed on Papua LNG as the project name, recognising the importance that both the Central and Gulf provinces play in developing the resource for the benefit of the country and its locals.

In recent years, with the PNG LNG project set to deliver nine trillion cubic feet (Tcf) of gas over its 30-year lifespan and the exciting discovery of ElkAntelope, now the world’s most significant discovery in fold and thrust belts – Papua New Guinea has been labelled as having the most promise for large oil discoveries world-wide, placing it, albeit unexpectedly, firmly on the global energy map.

The central processing facilities for the country’s second liquefied natural gas plant will be located near the Purari River in the Gulf Province, 360km north-west of Port Moresby and will be connected to the LNG facility via onshore and offshore gas and condensate pipelines.

Selection of the final development concept, which includes the size and capacity of facilities, is set to begin early next year following the appraisal completion of the Elk-Antelope field. Front-end engineering and design with early works are scheduled to follow later in the same year with a final investment decision (FID) on track for 2017.

Dr. Michael Hession explains how the site choice for Elk-

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Antelope is imperative to creating value from what is becoming one of the lowest capex LNG projects in the world. A former Woodside and BP Executive, Dr Hession has been at the helm of InterOil for two years now, following his appointment in July 2013.

“Total have a large team at work and the venture expects to enter front-end engineering and design for the LNG project in 2016. Total is ramping up their presence in Papua New Guinea and we now have a world-class LNG operator operating a world-class field.

“Sites were chosen for their technical, economic and environmental benefits and

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“While PNG LNG has paved the way and established PNG as a country that can deliver a mega project, we’re on their coattails and hopefully we’ll follow with the country’s second LNG project”

followed extensive surveys and studies by Total over the past year. These sites represent the best locations.

The central processing facility in the Gulf Province will be near the gas field with river access. The LNG facility near Port Moresby has potential for synergies with existing infrastructure and sufficient land for significant LNG train expansion,” explains Dr Hession.

BIG DISCOVERY, BIG DEVELOPMENTS Formed in 1997 following the relocation of a refinery from Alaska to Papua New Guinea, InterOil later discovered ElkAntelope in 2006 and 2008 respectively. The biggest discovery in Papua New Guinea’s history, the Elk field lies above Antelope in its own reservoir

INTEROIL system. Following geological tests, Antelope is thought to be a high permeability reservoir with a gross column between 700m to 800m.

Selling off its refinery and downstream assets, InterOil made the decision to focus on its upstream development business.

Following its historic discovery of Elk-Antelope, InterOil made five consecutive discoveries within the Eastern Papuan Basin – considered to be the most exciting emerging hydrocarbon basin in the world.

With licences now spanning across 16,000 sq. km, InterOil has gained an enviable and highly informative understanding of the region’s geology through numerous aero-gravity surveying – completing the largest seismic data set of any company in the basin.

Papua New Guinea is largely dominated by two basins – the less explored of the two is the Eastern Papuan Basin with the more heavily explored, the Western Papuan Basin, laying adjacent. Separated by a deepseated fault, each basin, while containing working hydrocarbon systems, has very different evolutions and geological components.

In the Western Papuan Basin, a total of 280 wells have been drilled and include discoveries at Stanley, Hudes and Kutubu. It is this basin which is centered on the PNG LNG project - containing expected gas reserves of 9 Tcf and oil reserves set to reach 200 million barrels.

And while the Eastern Papuan Basin contains just 65 wells, these include many of the country’s new and key discoveries - Raptor, Bobcat, Triceratops and Elk-

Antelope - all discovered by InterOil. Earlier this year, InterOil announced that an appraisal well drilled at its Triceratops gas discovery successfully delivered strong flow test results. InterOil recorded the Triceratops-3 probe to flow at a rate of 17.1 million cubic feet of gas per day, with an additional 200 barrels per day of condensate.

“We are excited by the well results and the enhanced development optionality that Triceratops gas can provide,” Dr. Hession explains.

In August, the Joint Venture began drilling, as part of its appraisal campaign on the Elk-Antelope gas field, a sidetrack well at the Antelope-4 development site. Despite its initial suspension earlier this year Total acquired approval from the PNG Department of Energy to re-enter the well in August – operations resumed with the on-site preparation and testing of well-head equipment.

Although initiated at a measured depth of 2,828 feet, the side-track was drilled ahead at a depth of 2,936 feet.

40 years of conducting safe and cost efficient rig moves.

United States 503-678-1222 Port Moresby 675-325-2274 www.colheli.com

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Quickly emerging as the most cost effective LNG plant in the world, it is the location of the ElkAntelope field which is proving so advantageous cost-wise. With the PNG LNG project seeing average costs of up to $19 billion, the ElkAntelope field lies 300km closer to Port Moresby, requiring 300km less of pipeline with no necessity for an expensive air strip for

LNG buyer markets. Both China and Japan are long-term LNG customers for the country with demand for LNG predicted to double by 2020.

Consuming up to 9 Tcf of gas every year (the equivalent of one PNG LNG project), Japan stands as the world’s single biggest LNG importer – with up to 100 million tons a year. With its surge in

making waves across Papua New Guinea, it is hoped Elk-Antelope will aid in catalysing this, opening up a wealth of employment opportunities for the PNG locals.

transportation.

Papua New Guinea is certainly a cost efficient location for this gas project compared to sites in East Africa for example - holding the distinct advantage of laying within easy reach of the Asian

economic growth, this demand is set to further increase over the next two decades, due to the growing middle class population which is expected to triple by 2030.

And with the economic boom

upwards of 22,000 people, has become an integral and important project for the country, providing invaluable input to Papua New Guinea and helping to provide a revenue stream for the government. With living standards

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A GROWING MARKET The only new build LNG export plant in the world last year, PNG LNG, led by ExxonMobil and partners Oil Search, employing

INTEROIL

of locals continuing to rise, it is expected that the Elk-Antelope project will have an equally positive effect.

Gas from the 6.9 million-ton per annum integrated PNG LNG project is sourced from seven separate fields; Hides, Angore, Juha gas fields and from the fields operated by Oil Search; Kutubu, Agogo, Moran and Gobe Main oil

onto LNG tankers before it is shipped to the Asian gas market.

“The onset of that project demonstrated to the world that the PNG government was stable enough and competent enough to bring on a major project, the fiscal regime works and is stable and competitive,” a spokesman at InterOil explains to Total World Energy.

A STRONG VISION

fields.

Conditioned in the PNG highlands, gas from the fields is transported by gas pipeline to the LNG plant, located 20km northwest of Port Moresby. Liquefied at the LNG plant, the gas is loaded

“While PNG LNG has paved the way and established PNG as a country that can deliver a mega project, we’re on their coattails and hopefully we’ll follow with the country’s second LNG project.”

employees on board: “We’ve got a pretty robust team of people who are very experienced with LNG projects around the world who have come from Shell, BP, Chevron and Woodside to work with us,” InterOil’s spokesman

Recently appointing Thomas Nador as Executive Vice President of the Papua New Guinea Business Operation, this follows the election of Isikeli Taureka, InterOil’s former Executive Vice President to the company’s board of directors.

InterOil is certainly not averse to ensuring it has the very best

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explains.

Based at Port Moresby in PNG, Nador’s role includes accountability for the company’s daily operations in Papua New Guinea within the health, safety, environment, human resources, administration, community and government affairs and supply chain sectors.

Taking up the role of Executive Director at InterOil, Taureka will now hold the responsibility for providing strategic advice to the board, managing senior relationships with business, political and community stakeholders and assisting the Chief Executive with key investor relationships.

“We’ve got quite a few geological staff from Papua New Guinea and a lot of our finance and HR department are from PNG,” the spokesman explains.

“We’re determined to increase the capacity and capability of Papua New Guinea because they are capable and they are readily available but haven’t necessarily had the same opportunities as non-Papua New Guineans.

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“We have world class assets and we’ve got an extremely competent team with vast international experience, so on those measures we’ve got all the ingredients to make it work”

“An entrepreneurial spirit spawned the company and as for the future, the company is well funded. We have world class assets and we’ve got an extremely competent team with vast international experience, so on those measures we’ve got all the ingredients to make it work.”

Gas is now undeniably a longterm game, with the LNG market continuing to grow and flourish. An increasingly strong player, Papua New Guinea is sitting comfortably in a prime location – on the doorstep of the world’s largest gas market. And as the pressure on coal continues, development projects such as PNG LNG and Papua LNG are very good news for the country indeed.

Speaking recently, PNG’s Prime Minister, Peter O’Neill, said: “We envisage that the Elk-Antelope field has gas for at least two production trains, which would double PNG’s current production output. The progress being made in this advancement is very good news for the people in the Gulf Region and very good news for all Papua New Guineans.”

INTEROIL

BGP PNG Exploration Limited is a locally registered subsidiar y in Papua New Guinea of BGP Inc., China National Petroleum Corporation. We ha ve been in this countr y for more than four years, completed several projects in Wester n and Gulf Provinces, gained a lot of local exper ience and know PNG ver y well. The Antelope project for InterOil was our most challenging. Usually it is not easy to dr ill a 27 meter depth hole in mudstone. However it was much more challenging to complete loading in this project. Finally, we finished all holes in a high quality production wa y with BGP powerful por table dr illing r igs. And three component data were acquired firstly in Papua New Guinea as well.

BGP PNG is keen to provide our ser vices with high quality, cos t effectiveness and HSE s tandard compliance to the Oil&Gas indus tr y and develop our selves together with the local communities .

Contact person | Mr.Chen Bingwen Mobile | 00675-73239172 Email | chenbingwen@bgp.com.cn Website | www.bgp.com.cn PAGE 9

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