ALL eyes are on the Australian and PNG stock exchanges at the moment with PNG watchers keenly awaiting the next drilling update on the potentially ‘game changing’ Muruk well in PNG’s Southern Highlands.

At last reports, the side-tracked Muruk-1 ST1 appraisal well was still drilling ahead to evaluate the structure and investigate the down-dip extent of hydrocarbons from the exciting Muruk-1 discovery announced by ExxonMobil, Oil Search and Santos in late 2016.

In what was a tremendous Christmas/New Year’s gift for the three companies and PNG’s oil and gas sector, it was announced on December 28 that the Muruk-1 well exploration well had encountered a gas saturated reservoir quality sandstone in the Toro Formation, with no hydrocarbon-water contact being observed. Analysis of downhole fluid samples recovered to surface has indicated that the hydrocarbon composition in Muruk is similar to that in the adjacent Hides gas field.

Pre-drill estimates were that Muruk-1 was testing a potentially multi-tcf gas target and discussions since then have not that figure with regards to potential new reserves that could be added to the PNG LNG project.

The fact that ExxonMobil made a significant announcement about the discovery suggests that it is indeed potentially very sizeable and a major new find for PNG. ExxonMobil is not one for announcing small finds.

The current side-track is testing a location about one km down-dip of Muruk-1 and the participants in the well have already suggested they could fast track a second side track if the initial appraisal is successful.

Drilled in Petroleum Prospecting Permit PPL-402, Muruk is located only 21 kilometres northwest of the nearest Hides well, which would make it ideally suited for a quick and cost-effective tie-in to PNG LNG project when an expansion goes ahead.

Muruk looks like it might be what BP had hoped for with the Karius-1 well in the mid-1990s, a significant gas resource twinning the giant Hides field.

In its announcement of the discovery, ExxonMobil (which holds a 42.5% stake in PPL-402), stated that the Muruk-1 well had encountered similar high-quality sandstone reservoirs as the Hides field and was in line with pre-drill expectations.

“We are excited by the results of the Muruk-1 exploration well, which confirms the presence of hydrocarbons in the same high-quality sandstone reservoirs as the Hides field that underpins the PNG LNG project,” said Steve Greenlee, president of ExxonMobil Exploration Company

“The Muruk exploration success demonstrates the strength of ExxonMobil’s long-term investment approach and reaffirms its commitment to Papua New Guinea,” he added.

For Santos, the success at Muruk is a real bonus, having only farmed-in for a 20% interest as the well was heading towards its target reservoir.

The Australian company said Muruk-1 was a highlight of what was a very strong quarter.

The well’s operator, PNG champion Oil Search, highlighted the well’s proximity to PNG LNG Project infrastructure and the potential to support potential LNG expansion, if appraisal activities are successful.

It also told shareholders the Muruk well result has also high-graded the structural trend immediately adjacent to the Muruk structure, highlighting the potential for further upside in the area.

The discovery at Muruk was part of very positive period for the PNG oil and gas sector, with ExxonMobil’s completion of its acquisition of InterOil also adding impetus to a potential PNG LNG expansion.

A strong upgrade of the reserves numbers for the PNG LNG project after an independent evaluation was also a critical announcement.

Aside from the Muruk side-track, there is also great interest in the soon to be drilled P’nyang South 2 well in  PRL-3.  Preparatory works have commenced, with the well scheduled to be drilled in the second half of 2017.

The primary objective of the P’nyang South 2 well is to increase 1C resource volumes, with recertification of the field planned after drilling.