AAPG Explorer - American Association of Petroleum Geologists

Michael McWalter is a director of the Board of the Transparency International-Papua
New Guinea and of the Circum-Pacific Council for Energy and Mineral Resources. He
also is treasurer of AAPG’s Asia-Pacific Regional Council and an alternate delegate to
the AAPG House of Delgates. He has worked in Papua New Guinea since1976.
The main reservoir in the Kutubu field is the Early Cretaceous, Berriasian Toro Sandstone, thought
to be a transgressive marginal marine and shoreface sand, which has excellent lateral continuity,
splendid reservoir quality and is generally about 100 meters or more thick.
Continued from previous page
they promoted and matured their plans
for gas development and marketing, and
a reduction in the petroleum taxation rate
applicable to gas developments.
This stimulated development planning,
and BP and Esso led a scheme to develop
the Hides gas field for supply to a LNG
plant at Madang on Papua New Guinea’s
north coast, but the 1997 Asian financial
crisis and consequent uncertainties about
East Asian LNG import growth – and a
terrible tsunami at Aitape to the west of
Madang, highlighting the tremendous
seismic risk of a north coast LNG plant
location – put a temporary end to LNG
plans.
For several years the gas field
licensees, led by Chevron, examined
the idea of developing the gas fields for
supply to east coast Australian markets
by an export pipeline, but that notion
failed due to competition with Australian
domestic gas supply, low gas prices and
high infrastructure costs to build the gas
export and delivery systems.
Meantime, the government continued
to promote gas development by whatever
means might be commercial. To support
its plans, a seismic hazard study was
commissioned by the Petroleum Division,
which clearly showed that evacuation of
the gas from the fields within the Papua
New Guinea Highlands would best be
done through the use of a southerly route
down to the Gulf of Papua.
In August 2007, LNG development
was again picked as the best method of
monetizing the gas fields after the concept
of transporting gas to Australia was
abandoned. This time Esso Highlands Ltd.
is leading a large consortium of gas field
licenses and the state.
Plans are being turned into reality and
construction is under way for a 6.9 million
tons per annum LNG plant for the sale of
LNG to Japan, China and Taiwan.
* * *
Hitherto these natural gas
accumulations were distressed, but now
they gave value.
Now that the government has been
seen to negotiate and approve gas
agreements and grant the various licenses
for the field developments and pipeline
and facility construction and operations,
natural gas in Papua New Guinea has
become a sought-after outcome from
exploration drilling.
A small Canadian independent
company, InterOil Inc., has in recent years
discovered a large onshore Miocene reef
in the eastern Papuan Fold and Thrust
Belt. This is the Elk-Antelope gas field,
which may have enough recoverable gas
to support a separate LNG project.
In the Western Province, adjacent to
the border with the Indonesian Province
of West Papua, another consortium of
licensees led by Talisman Energy of
Canada are planning to aggregate gas
from a series of small gas fields within the
Papuan Foreland.
If these new plans mature, Papua New
Guinea will have the capacity to establish
20 million tons per annum of LNG export
by 2020, which would make it a significant
regional LNG supplier – and enable it to
strengthen its economy and pursue its
many development needs. EXPLORER
The Hides gas field contains somewhere between 5.5 to 12.5 trillion standard cubic feet (TCF) of
original-gas-in-place, with a most likely volume of 7.1 TCF.
AAPG
EXPLORER
WWW.AAPG.ORG JULY 2011
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