EHL: PNG LNG Capacity Increased

Esso Highlands Limited (EHL), operator of the PNG LNG Project, has announced that the Project capacity has increased by 5 percent to 6.9 million tonnes per year from 6.6 million tonnes per year. The increase has been achieved through system-wide optimisations as well as some minor modifications.

Progress is being achieved across all parts of the Project. Drilling is under way on two production wells, the offshore pipeline has been completed, all major process equipment for the LNG plant and all pipe rack modules on the LNG jetty have been installed, all piling is complete and foundations are under way at the Hides Gas Conditioning Plant.

Construction progress is on track at the Komo Airfield, where laying of the runway asphalt is under way, and the movement of materials via the Highlands Highway to Hides is exceeding plan.

The Project remains on track to achieve start-up in 2014.The estimated Project cost has increased from $15.7 billion to $19 billion (excluding Port Moresby administration facilities and shipping). Foreign exchange is the largest single contributor of the increase and to a lesser extent, delays from work stoppages due to community disruptions and land access led to increased construction and drilling costs. Extraordinary logistics and weather challenges also increased costs. In particular, rainfall exceeded historic norms for most of the last two years.

Decie Autin, PNG LNG project executive, said: “ExxonMobil successfully operates world-class projects around the world in a broad range of technical, operational and financial conditions. The Project team was able to overcome significant delays and still maintain overall schedule through re-sequencing work under unique and very challenging circumstances. Despite the cost increase, Project economics are helped by the 5 percent increase in plant capacity and approximately 30 percent increase in commodity pricing since Project funding in 2009.”

Additionally, EHL continues to assess and advance new exploration opportunities in PNG. Exploration results are being used to support future development studies that may include a potential third train.

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LNG World News Staff, November 12, 2012; Image: Santos