Papua New Guinea Development
The chart below highlights the job at hand for Horizon Oil’s board and management and that is to progress the commercialisation of the Company’s substantial gas and condensate resources in Papua New Guinea. These account for 87% of our total audited reserves and contingent resources of 116.1 million barrels of oil equivalent.
Confirmation of the potential value of the PNG resources was received in the recent Independent Expert’s Report by Grant Samuel, who assessed the value of Horizon Oil’s PNG assets on an unrisked basis as being in the range US$274 – 552 million. Of course these values need to be adjusted to reflect the range of uncertainties to which the project remains exposed (and it was Grant Samuel’s risked valuation of US$30 – 60 million which necessitated the non- cash impairment referred to earlier).
However, it has to be said that the potential value to the Company of these assets, as the risk is progressively reduced, is very large indeed.
Pleasingly, based on the work of the last year, our project team has focused in on a development concept which involves a mid-scale LNG project of capacity 1.2 – 2.0 mtpa, located at or near Daru Island in Western Province. With reference to the PNG map in the Activities Review section, feed gas for the proposed liquefaction plant will comprise the aggregation of gas from Stanley field that is not required to supply the domestic market, from Elevala/Ketu fields and possibly, but not critically, from other gas resources along the pipeline route (subject of course to the agreement of the owners of those resources).
Certain elements of the concept are yet to be resolved – mainly the additional fields to be included in the aggregation, the specific location of the liquefaction plant and the export route for the condensate – but planning for the upstream processing facilities and pipeline is advanced and landowner studies and environmental approvals are also progressing well.