Oil Search is aggressively pursuing LNG expansion opportunities in PNG. Key activities to support our gas growth strategy include:
One of Oil Search's strategic objectives is to capitalise on the asset base being constructed by the PNG LNG Project. Specifically, an early commitment to an expansion of the Project, by adding a third LNG production train (T3), has been highlighted as the highest value opportunity in Oil Search's portfolio of potential projects. Key aims for Oil Search are to aggregate sufficient gas resources to underpin the potential development of T3 and to commit to T3 in the earliest sensible timeframe.In early 2012, an exploration well at P'nyang South in PRL 3 discovered a substantial gas accumulation, which has led to a material increase in total estimated gas resources at P'nyang. The PRL 3 joint venture (OSH 38.5%, ExxonMobil 49.0%, JX Nippon 12.5%), led by ExxonMobil, is undertaking studies on the potential development of this multi-tcf gas and condensate field, with the use of the gas as a foundation resource for a potential T3 the primary option. This work will continue through 2014, in preparation for the submission of a development licence application for the field in early 2015.In addition to the P'nyang resource, potential gas upside exists within the existing Project gas fields, most notably in the Hides gas field, which is not yet fully constrained. Eight wells are planned to be drilled on the Hides structure as part of the PNG LNG Project development plan. One of these wells, the Hides produced water disposal well, will help to better define the gas-water contact in the field. Development drilling at the Hides gas field will continue through 2013 and 2014. Modelling of the Associated Gas field reservoirs has also demonstrated the potential for additional proven gas reserves within the oil fields.Oil Search is seeking to commit to an expansion of the PNG LNG Project within a timeframe that enables the transfer of knowledge, skills and trained workforce from the foundation project to the potential expansion project.
Oil Search's objective in the Gulf, which is contingent on exploration success, is to create a new LNG development opportunity, with the option to become either a standalone LNG project or to supply third party gas to an existing development. In 2009/10, Oil Search undertook a comprehensive geological study of PNG and identified the Gulf of Papua as one of the most prospective areas in PNG for finding new gas resources. During 2011 and 2012, Oil Search acquired an extensive 3D seismic survey over its key offshore Gulf licences, to de-risk the most prospective areas. A range of prospects and leads were identified, and a drilling programme commenced in early 2013.During the first half of 2013, two gas discoveries were made at Flinders-1 and Hagana-1 (OSH 40%), an encouraging result given drilling had not taken place in the Gulf of Papua for over 12 years. Kidukidu, the third and final well in the exploration campaign (OSH 100%) was spudded in the third quarter of 2013, encountering two sand intervals, however was found to be largely water bearing. While the volumes discovered to date are likely to be relatively modest, the programme has confirmed the presence of good quality reservoir sandstones in the Plio-Pleistocene section, a gas charge and the effectiveness of stratigraphic trapping in the play, as well as the de-risking capability of our high quality 3D seismic data.Work is being undertaken to re-calibrate the 3D seismic data with the drilling results, which will lead to updated geological models and an improved understanding of the petroleum systems in the Gulf of Papua. This will help the Company fine tune and better define the remaining prospectivity in the region.