Oil Search: PNG LNG hits highest monthly production average despite maintenance

ExxonMobil-operated PNG LNG project hit a new record, reporting a monthly production average of 8.65 mtpa in June, the highest it recorded since start-up. 

According to a quarterly report issued by Oil Search, the owner of a 29 percent stake in the project, said the project operated at an annualized rate of approximately 8.1 mtpa during the period, 3 percent lower than the level achieved in the first quarter, due to scheduled maintenance in May.

The maintenance shutdown also impacted the total production that reached 7.24 million barrel of oil equivalent (mmboe) during the second quarter, 4 percent lower than in the previous quarter.

Total revenue dropped 3 percent to $332.5 million during the second quarter from $343.7 million during the previous three months.

Speaking of the 17-day shutdown, Oil Search managing director Peter Botten said, that production rates at the LNG plant “picked up substantially towards the end of the period following the compressor upgrades completed during the maintenance program.”

LNG sales rose by 3 percent hitting 30,025 billion Btu, as 27 cargoes were sold during the first quarter, one more than the first quarter. Oil Search said that 21 cargoes were sold under long-term contract and six on the spot market, with three cargoes on the water at the end of the quarter.

The average price realized for LNG and gas sales increased 7 percent to $7.93 per mmBtu, reflecting the approximate three month lag between the spot oil price and LNG contract prices.

Additional PNG LNG volumes raise interest

During the period, ExxonMobil continued marketing up to 1.3 mtpa of LNG from the project, raising “high levels of interest” from potential customers.

Botten noted that strong interest has been shown from potential customers, adding that “should contracts be secured for the full 1.3 mtpa being offered, this would take total contracted volumes to 7.9 mtpa.”

In addition, talks on progressing the next phase of LNG development in Papua New Guinea continued during the quarter between ExxonMobil, operator of both the PNG LNG project and P’nyang, and Total, operator of Elk-Antelope field.

Various development concepts for the Elk-Antelope and P’nyang gas fields are being discussed. Oil Search believes the most likely development is based on the construction of two LNG expansion trains located at the PNG LNG Project plant site, thereby utilizing existing downstream infrastructure, using the existing gas resources in the Elk-Antelope and P’nyang fields.

Revenue jumps in first half 2017

Oil Search’s report shows that the total revenue for the first six months was at $676.2 million, 16 percent higher than in the first half of 2016.

Total production for the first half of 2017 was 14.81 mmboe, similar to 2016 first half production, and the company remains on track to deliver 2017 production within the 28.5 – 30.5 mmboe guidance range.