Participants in PRL 21 are:
|Horizon Oil||27% (Operator)|
Further progress was made during the year on pre-development planning and regulatory aspects of the project, including landowner, environmental and technical matters. A key milestone was achieved with the formal approval by the PNG Conservation and Environment Protection Authority of the Elevala Development environmental impact statement.
The PRL 21 joint venture participants progressed the feasibility study for a Western Province based mid-scale LNG development concept, potentially involving aggregation of the ~2 tcf of discovered Western Province gas resources, the cornerstone volumes of which are the condensate-rich Elevala/Tingu and Ketu fields operated by Horizon Oil.
Significant potential also emerged during the year for sales of large gas volumes to satisfy future West Papuan agribusiness and industrial demand arising from the Merauke Integrated Food and Energy Estate, an Indonesian government food security initiative. After preliminary discussions with key existing and potential Indonesian stakeholders, the Company is carrying out preliminary feasibility studies on these opportunities.
Considerable exploration and appraisal activity commenced in 2016 and will continue into 2017 immediately to the north of Horizon Oil’s Western Province gas fields, with the P’nyang participants planning to drill up to two appraisal wells and the PPL 269 participants, including Repsol, Santos and Oil Search spudding two exploration wells during the year, with total drilling costs likely to be in the order of US$400-500 million.
Horizon Oil considers that these recent material developments have the potential to increase the likelihood of promising alternative commercialisation pathways emerging for its substantial gas resources in the Western Province forelands. The possible export pipeline route connecting P’nyang gas field to the existing PNG LNG system at Kutubu, offers, in Horizon Oil’s view, the potential for a gas aggregation project involving Stanley, Elevala/Tingu, Ketu, Ubuntu and P’nyang fields.
As noted above, the PRL 21 joint venture will progress planning for a greenfield LNG project at Daru Island as its base case and the Company will continue its feasibility analysis for gas sales to West Papuan agribusiness and industrial users. However, the opportunity to participate in a brownfield LNG development by way of aggregation of Horizon Oil’s gas fields with those of other operators represents a potentially attractive proposition with less engineering and financial risk.