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Momentum picks up at Elk-Antelope venture

ExxonMobil's entry prompts plans to begin FEED work later this year

The owners of the Elk-Antelope gas resource in Papua New Guinea intend to begin front-end engineering and design late this year or early next as development momentum builds following ExxonMobil's entry into the venture.

ExxonMobil's recent acquisition of InterOil has given the US supermajor a 36.5% non-operating stake in Block PRL 15, which hosts Elk-Antelope.

Total holds a 40.1% operating interest, while Oil Search has 22.8% and minority parties 0.6%, with the PNG government having its customary back-in right to up to 22.5%.

The PRL 15 joint venture is currently in discussions on how to develop the fields, which contain 6.53 trillion cubic feet of gas and 57.4 million barrels of condensate on a gross basis, according to Oil Search.

"Oil Search anticipates that this (development) will be undertaken in conjunction with the development of the P’nyang gas field and will utilise the existing downstream infrastructure of the world-class PNG LNG project," said Oil Search. "We expect talks regarding potential co-operation and integration of the next phase of LNG development to continue on an accelerated basis during 2017, leading to the delivery of binding commercial agreements before year end."

Oil Search has maintained for some time now that Elk-Antelope, along with the P'nyang field, contain 10 Tcf of discovered undeveloped best estimate gas, which the PNG copmpany believes can support two additional 4 million-tonne-per-annum LNG trains at the ExxonMobil-operated PNG LNG location near Port Moresby.

ExxonMobil is understood to be supportive of a collaborative development of Elk-Antelope that leverages off the PNG LNG infrastructure.

Chief executive Darren Woods said recently the PNG LNG asset provides a reliable source of cash flow and will "serve as a foundation for the further developments of attractive growth opportunities".

"With several discovered undeveloped resources in the area, we are evaluating a capital-efficient expansion of multiple trains at the existing PNG site. Potential resources to be tied-in include the P’nyang field, the Elk-Antelope field from the InterOil acquisition, and the recently discovered Muruk field."

Total's intentions are less obvious. The original intention before ExxonMobil came on board was to build a new LNG facility under the project name Papua LNG. Total chief executive Patrick Pouyanne said recently that "we (the joint venture) all agree that we'll find a way to be smart together and to make the most efficient project ".

Oil Search said in its latest project guidance that the joint venture is targeting entry into the front-end engineering and design phase in late 2017 or early 2018. 

A final investment decision is earmarked for late 2018 or early 2019.

The competition for the FEED is likely to be heavily contested. The French contractor Technip was previously engaged in basis of design work on the Papua LNG project.

Meanwhile, the Antelope Deep exploration prospect below the recent Antelope-7 appraisal well has been completed.

About nine metres of conventional cores were cut and a total of 510 metres of carbonate was drilled through to the target depth.

Preliminary interpretation of the log data suggests the carbonate has "limited reservoir potential and is unlikely to be hydrocarbon bearing", said Oil Search .

e8e1aecb09b7272f1ebeec09ba417a43 Efficient:  Total chief executive Patrick Pouyanne    Photo: REUTERS/SCANPIX