Papua New Guinea: Three-year drilling contract a sign of rebound in activity

Papua New Guinea's dominant onshore drilling contractor has signed a three-year drilling services agreement with its "principal customer" as a signal that a rebound in exploration and development activity in PNG is under way.

High Arctic Energy Services said it had agreed terms with its principal customer in PNG for a three-year contract renewal covering customer-owned heli-portable drilling rig 103 and High Arctic’s services related to the supply of personnel, camp accommodation and rental equipment to support the drilling operations.

Key technical personnel have started deployment and work is under way to prepare Rig 103 and its leapfrog unit for recommencement of drilling early in the fourth quarter of 2022.

High Arctic did not identify its customer but said it had recently merged with one of the largest E&P companies in Asia-Pacific.

The only merger in PNG in recent times was the takeover of Oil Search by Santos, which now has large stakes in the producing PNG LNG project as well as operatorship of all PNG's producing oilfields.

In addition, Santos is a major interest holder in the planned Papua LNG and P'nyang projects.

High Arctic said its contract renewal followed on from recent positive developments "that highlight the tremendous expansion potential for LNG production in PNG".

TotalEnergies recently began the upstream front-end engineering and design work for Papua LNG, which will also require two new LNG trains at the PNG LNG facility, while ExxonMobil signed a gas [project development] agreement for the P’nyang gas field, which could also underpin a new train at PNG LNG.

Mike Maguire, High Arctic's chief executive, said: “Papua New Guinea is key to High Arctic’s long-term business strategy.

“There have been significant LNG investments in PNG made by large oil and gas companies. High Arctic is positioned well to support future investments given high barriers to entry due to the technical expertise required to operate the heli-portable drilling rigs in remote locations.

"High Arctic’s contract drilling service history in PNG includes our long-term principal customer and both major multi-national companies operating the two LNG project joint ventures, among many others.

“We are currently providing services to both our principal customer and the PNG LNG operator, and we are pleased to be returning to consistent drilling operations.”