Total close to decision on cooperation with PNG LNG plant, says MD Blanchard

The operator of  Papua New Guinea’s prospective Papua LNG project says technical and environmental issues will determine if it uses the plant of the existing PNG LNG project. Managing Director of Total E&P PNG, Philippe Blanchard, says a decision will be made within the next six months.

The recent takeover of InterOil—a venture partner in Papua LNG—by ExxonMobil, the operator of the existing PNG LNG project, has opened up the possibility of cooperation between PNG’s two LNG projects.

Total E&P PNG’s Managing Director Philippe Blanchard believes there are synergies between his project and the existing LNG Plant. ‘We would not be doing our job if we were not to investigate this option,’ he says.

‘The current LNG prices are so low that if you want to make a project competitive, profitable, you need to reduce to the maximum extent feasible all your costs,’ Blanchard told a Port Moresby business event last week.

‘There is opportunity for cooperation between Papua New Guinea’s dominant oil and gas players through sharing of facilities.’

He said the decision is imminent. ‘Within the next five-to-six months, it should be known if Papua LNG will be a standalone or integrated project.’

Cheaper and faster

Another executive leading the call for co-operation has been a partner in both projects, Oil Search’s Peter Botten.

Oil Search's Peter Botten Source: Business Advantage International

Oil Search’s Peter Botten. Source: Business Advantage International

‘There is opportunity for cooperation between Papua New Guinea’s dominant oil and gas players through sharing of facilities, or an aggregation of reserves,’ he told Business Advantage PNG last year.

He said it provided an opportunity for cheaper development of LNG, and at a faster rate.

Gerea Aopi, President of the PNG Chamber of Mines and Petroleum, has speculated that ‘you might have Total operating the upstream and Exxon Mobil operating the downstream’.

Process

Blanchard says the upstream central processing facility for Papua LNG will be built on the site of PL15 in Gulf Province. This will separate the gas and condensate, which will be sent through two pipelines for export from Caution Bay, about 20 kilometres north-west of Port Moresby and adjacent to the existing PNG LNG plant site.

‘We have checked 14 sites along the coast from Port Moresby and shortlisted six and in the end we found Caution Bay in Central Province was the best site,’ said Blanchard.

‘Over the next 18 months Total will finalise the design of project.’

‘If it were located in Gulf Province, we would need to build a jetty twice as long as in Caution Bay, a breakwater to protect the ships, and the plant would adversely affect the way the communities currently live and fish.’

Over the next 18 months, he says, Total will finalise the design of project and he hopes to sanction the project by the end of 2019, with production to begin within four years after that.

‘Before we do that, we have to do our environmental and social studies, development forums, be granted an environment permit and secure the financing. So, the road is long.’

Emissions

Blanchard added that he and his team have to work out how to deal with the emissions coming out of the Elk–Antelope field.

‘We need to find a place where we can relocate the CO2.’

‘We know how to get rid of the acidic gases but the difficulty is, what do you do with the CO2 [carbon dioxide] once you have got rid of them?

‘Are you going to vent them or are you going to find an option where you can re-inject them somewhere? If you vent the CO2, you are going to contribute significantly to the greenhouse gas effect.

‘In a country like PNG, Total has a comprehensive position that this is not acceptable. So, we need to find a place where we can relocate the CO2.’

Blanchard said it was also critical to avoid creating acid rain.

Tax

Blanchard also said decisions contained in the 2017 Budget had made the project ‘less attractive’ and he would be seeking talks with the government to alter the project’s tax regime ‘because those terms will determine how competitive the project is’.

 

Copyright © 2017 Business Advantage International.

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