Papua New Guinea Gas Heats Up  

The WSJ's Environmental Capital blog has a post on gas discoveries in PNG - Ample Archipelago: Papua New Guinea’s Gas Groove.

Papua New Guinea is shaping up to be one of the world’s hottest natural-gas plays.

That may seem like a pretty bold statement considering that the South Pacific nation produced a measly 5 billion cubic feet of natural-gas in 2006, and didn’t export any of it. (Texas consumes that much every 12 hours.)

But that’s all about to change. Earlier this year, Exxon Mobil announced it was pushing ahead with plans to build a huge liquefied natural gas export facilty in Papua New Guinea.

And on Tuesday, Australian-based InterOil Corp. announced it had drilled a massive gas well in its Antelope field. How massive? The well flowed at a rate of 705 million cubic feet of gas a day, which nearly doubled an earlier well in field that InterOil was so proud of they got Guiness to certify as a record setter. To help put in perspective just how big these wells are, Devon Energy recently bragged about a well in Louisiana that flowed at 30.7 million cubic feet a day.

Of course, Devon can just hook its well into a pipeline. The road for InterOil is a good deal bumpier. The company wants to build its own LNG export terminal, but it will need a partner to help cover the project’s $6 billion cost. Wayne Andrews, InterOil’s vice president of capital markets, told Environmental Capital that the company hopes to have a partner on board in “a few months,” but even assuming that happens, the project won’t be complete until 2014 or 2015.

It could be worth the wait. Papua New Guinea’s location positions it well to export gas to Japan, Korea and, eventually, India and China. That’s the same market being targeted by big Australian LNG projects like Chevron’s massive Gorgon project. Unlike most of those efforts, the Papua New Guinea fields are on shore and in relatively shallow, conventional basins, meaning they could have a cost advantage over the Australian projects.

And gas isn’t the only game in Papua New Guinea. InterOil’s well also produced 11,200 barrels a day of natural-gas condensate—essentially a very light crude oil.