Santos and Horizon Oil have urged investors to jet in to consider Papua New Guinea’s underexplored foreland blocks. Image courtesy MadNESS Photography.

Santos and Horizon Oil have urged investors to jet in to consider Papua New Guinea’s underexplored foreland blocks. Image courtesy MadNESS Photography.

SANTOS and Horizon Oil made the case for Papua New Guinea’s foreland blocks to be considered the next big thing in local gas exploration in their presentations at the 13th PNG Mining and Investment Conference.

“The question really is, what’s coming next in Papua New Guinea?” Santos PNG country manager John Chambers asked of the crowd assembled in the Sydney Hilton’s grand ballroom on 2 December.

Mr Chambers said the country’s foreland area was “relatively unexplored” and pressed his belief that there was more gas to be found.

“If you look at the Carnarvon basin there are about 800 exploration wells there,” he said, using the Australian basin as a means of comparison.

“The Papuan basin is of a similar size but only 160 exploration wells have been drilled since the 1950s.”

“There is not the same level of exploration in the Papuan basin…we think at Santos there are a lot of resources to be found in that region.

“Clearly there is potential in the foreland and I think there is more gas to be found.”

Mr Chambers said Santos was continuing to work on finding “small volumes of gas across relatively small prospects”.

He said the threshold for a standalone LNG plant was about five trillion cubic feet (tcf) of gas, which the company had calculated as potentially requiring the company to drill 25 wells.

“It doesn’t mean it will necessarily take that [many]. Someone might have a new play concept like InterOil did and find a new source of gas but we’re keen to keep doing what we’re doing in the Western province,” he said.

“It will take a lot of wells to get to the point where we can actually get to a standalone LNG.”

Mr Chambers said Santos was “certainly keen” on continuing to explore the foreland.

“We’re obviously looking for new play concepts out there, new ways we could be trapping gas or alternatively the foreland gas discoveries somehow have to be integrated into one of the other projects,” he said.

“They’re good gas fields, they’re just a bit on the small side compared to the spectacular things we’ve seen in the carbonate and foldbelt play.

“We see the foreland play as something that’s got a lot of potential – it needs some bigger discoveries, a lot of work, a lot of investment, a lot of seismic.

“It might or might not get to LNG status, but even if it doesn’t we still see there’s going to be interesting ways to monetise that gas in the future.”

Horizon talks up prospects

HORIZON Oil’s chief PNG representative Kelvin Bramley took the opportunity to talk up the company’s work on the Elevala-Ketu project at the mining and petroleum conference.

Mr Bramley said the bulk of the company’s upside was in PNG, following “a year of records” for Horizon.

“We like PNG and in particular we like this Western foreland area,” Mr Bramley said.

“It is prospective, relatively unexplored, the geology is reasonably straightforward and has is a relatively high geological chance of success albeit with smaller volumes.

“In addition the topography by PNG standards is relatively kind.”

On PRL 21, Mr Bramley said the company had acquired over 200 kilometres of 2D seismic and had drilled three appraisal wells.

“The result of that work is having established a reserve of 1 tcf and about 50 million barrels of condensate,” he said.

Mr Bramley said while the reserves were not large enough to justify a standalone LNG facility, the “quantity and quality of the condensate does present an opportunity to generate some early cash flow”.

“The final investment decision of Elevala-Ketu commenced in mid-2013 and since then significant progress has been made, including significant reservoir modelling,” Mr Bramley said.

He said the regulatory approval process was “well underway and remains largely on schedule” for confirmation of approval in the first half of 2015.

“Proposed development is very similar to that of the Stanley field,” he said.

“It is focused initially on condensate recovery… until a suitable gas commercialisation opportunity presents itself.”

The plan involves an integrated development incorporating both fields, with six development wells, three of production and three injection.

Raw gas would be transferred to a central processing facility, with a view to producing 210 million standard cubic feet per day and 11,000-12,000 barrels of condensate per day.

The Elevala-Ketu fields were discovered in 1990-91 and Horizon Oil’s joint venture partners are Osaka Gas, Talisman Energy, Kina Petroleum and Mitsubishi.