PNG oil and gas explorer and Western LNG project proponent Horizon Oil has met with PNG National Oil Company Kumul Petroleum Holdings to discuss the potential of the construction of a pipeline to help commercialise stranded gas accumulations in the Western Province.

The proposed collaboration between companies with gas assets in the Western Province and Kumul Petroleum was championed by Kumul’s managing director Wapu Sonk at the recent PNG Mining and Petroleum Investment Conference in Sydney.

Horizon recently reported that it had it is looking to provide input on planning for the open access pipeline which would be called the “Western Pipeline”.

Horizon said the PNG Government and Petroleum and Energy Minister Nixon Duban are highly supportive of the initiative.

The company’s CEO, Brent Emmett, said Horizon’s approach will be to continue advancing the gas pipeline export route southwards to Daru Island as its base case, because this alternative does not rely on support from other parties. However, he added that the emergence of the Western Pipeline could be a compelling proposition, especially if broadly supported.

Kumul Petroleum is promoting a Western Pipeline route which will run from the Western Province to the coast and on to Port Moresby’s Caution Bay

Speaking at the Sydney conference, Kumul  Petroleum’s Wapu Sonk said the project could bring many benefits to the country, including:

  • Allowing the development of fields that are currently stranded
  • Allowing for aggregation of supply to support industry
  • Providing gas for power generation
  • Creating jobs and businesses in PNG
  • Promoting the Development of Western Province
  • Providing gas to allow the development of a domestic gas market for multiple direct and indirect use
  • Encouraging exploration in the western part of the country by putting in place a route to market for future discoveries

Mr Sonk also reported that Kumul has already made significant advances with the project, including:

  • Establishing an experienced internal project team, based in Port Moresby
  • Entering into a Master Services Agreement with China CAMC Engineering Co Ltd and China Petroleum Pipeline Bureau for the pre-FEED and FEED work
  • Appointing AdvisianWorley Parsons as technical programme manager providing QA/QC services
  • Completing a detailed Concept Study in Q2-Q3 2016
  • Entering pre-FEED in Q4 2016

Muruk excitement

In reporting Horizon’s quaterly resutls, Mr Emmett also highlighted the potential for the exciting Muruk gas discovery to displace the P’nyang field as the gas supply for the foreshadowed expansion of the PNG LNG project.

“Should this eventuate, Pnyang gas could potentially flow via the Western Pipeline to supply, with the Western Province gas, another expansion train or trains in Port Moresby,” Mr Emmett said.

“Horizon Oil intends to collaborate closely with Kumul and the other holders of gas resources in Western Province to determine the optimal gas export pipeline route.”

Horizon has a major focus on utilising the gas contained in two Western Province licences where it holds significant interests – PDL 10 (Stanley) and PRL 21 (Elevala/Ketu).

The company said those permits hold the foundation volume of gas for a proposed Western LNG project (WLNG. A Joint Working Team (JWT) has been fortemd to focus the work effort and facilitate planning for the gas aggregation project.

Mr Emmett said it is envisaged that the JWT scope will be expanded to include other gas accumulations to potentially be included in the aggregation project.

Eaglewood acquisition

In other news, Horizon has acquired Eaglewood Energy (BVI) Limited which holds licence interests in Western Province, including a 50% interest in, and operatorship of, the Ubuntu gas condensate field, adjacent to the PRL-21 permit which Horizon operates.

Mr Emmett said participation in the Ubuntu gas condensate field provides complementary strategic benefits to Horizon Oil’s material PNG portfolio as the resource can be aggregated into the proposed Western LNG project.

The consideration for the acquisition was a combination of cash, funded through existing cash reserves, and assumption of the acquired entity’s PNG liabilities, including longer term licence obligations.