PAPUA New Guinea’s state-owned oil and gas company, Kumul Petroleum Holdings Limited (KPHL) says it has faced a number of national development challenges during its relatively short existence, but it believes that none will have more impact and be more rewarding than the proposed Kumul LNG Project.

The Western and Gulf provinces-based development includes the already proposed Midstream Western Province Pipeline that will facilitate the development of Upstream static or stranded gas and condensate resources away from the main oil and gas producing Southern Highlands area.

KPHL says its development options will provide a strategic and transformational LNG project that will create a sustainable economic oil and gas business economy, and subsequent long term supporting economies, for the country.

KPHL managing director Wapu Sonk said the company is focused on two questions as it eveluates its development proposals: How do we best create In-Country Value (ICV) while seeking a positive return on investment, and how do we contribute to building and sustaining a growing PNG economy?

KPHL concluded during its analysis for the Western Pipeline Downstream commercialisation options that while the return on investment for exporting gas into the other major PNG LNG projects is positive with 100% of the product is exported, the direct ICV created is short-term focused and the contribution to building and sustaining a long-term growth projected economy for PNG is minimal.

With that in mind, KPHL has given further consideration to expanding the Downstream commercialisation options that have been considered for the Western Pipeline beyond either exporting to another major project or a standalone LNG liquefaction facility.

The expanded options include a regional LNG export facility to encourage future gas fired power generation in remote locations of PNG via shallow water LNG import and re-gasification, a 180MW gas fired power generation facility to provide up to 100MW power transmission to the Western and Gulf provinces via future grid connection, methanol and other petrochemical bi-product (such as urea, fertiliser, ammonia, etc) process facilities and a liquid/condensate stabilisation and export facility for local export.

Mr Sonk said that collectively, these Downstream facilities form the Kikori Energy Hub (KEH) concept.

With the Upstream and Midstream facilities located in the Western province, initial analysis suggests the Downstream facilities would create considerable ICV if located in the Kikori region of Gulf province.

And while Mr Sonk said further analysis needs to be undertaken to measure and confirm the ICV created through the likes of increased power generation into the Western, Gulf and other provinces, initial high-level projections are that a Kumul LNG Project would create up to 30,000 direct and indirect local employment opportunities during the construction phase, and up to 4000 direct and indirect opportunities during the operational phase.

“The extension of the Western Pipeline Project scope to now include the development of the Downstream facilities being proposed for the KEH, combined referred to as the Kumul LNG Project, is a natural progression of a project of this size and nature,” Mr Sonk stated.

Post further conceptual and Front End Engineering Design (FEED) analysis of Upstream, Midstream and Downstream facilities of the Kumul LNG Project, and their interfaces, early work construction is expected to commence in early 2019, if a Final Investment Decision (FID) is approved; with first gas exports planned for early 2023.

KPHL has executed an agreement with the Singapore office of Kellogg Brown and Root (KBR) to provide the conceptual development and feasibility analysis for the Downstream Kikori Energy Hub (KEH).

The FEED work will include the identification of the most cost effective Downstream concept, inclusive of the LNG liquefaction technology and the final facility location recommendation.

“Now that we have completed the Pre-FEED of the Western Pipeline Project, we are focusing on the Downstream commercialisation options available to produce an economically sound project, and how best we can create In-Country Value to the people of Papua New Guinea while maximising our return on investment,” Mr Sonk said

Kumul LNG Project director, Jason Pollock said the scope of the concept feasibility study will look a wide range of development options.

This would include assessing the economics of a mid-scale LNG liquefaction and regional export facility to encourage future PNG electrification via gas-driven generation in remote areas, a 180MW power generation facility of which up to 100MW has been allocated for Western and Southern Highlands electrification via future grid connection, a methanol processing facility to enable local petrochemical bi-product production, and a condensate stabilisation, storage and regional export facility.