Kua Questioned on Papua LNG Gas Reserves, Liquid Production and Sales

By: Miriam Mandibi August 14, 2023

During questions without notice on the 9th of August, 2023 Rufina Peter, the Governor for Central Province, in a two-part question asked the Minister for Petroleum and Energy, Kerenga Kua, if a firm determination of gas reserve volume from the Elk/Antelope fields had been fixed and confirmed for future revenue, planning, and budgetary purposes.

“Papua LNG partners recently lodged application for Petroleum Development License to the Department of Petroleum and Energy ahead of its final investment decision, which I believe is scheduled for the end of this year 2023," Peter said.

"In the Papua LNG Gas Project Agreement signed between the State and Project partners, the foundation gas volume to be provided from the Elk/Antelope fields is projected to be at 10.3 Trillion Cubic Feet (TCF), initially following the discovery and tests by the former operator, the Interoil FCI, the gas volume was estimated to be 11.3 TCF," she added. 

"More recently, Total Energies as the new operator for the Petroleum Retention License PRL15 was carrying 6.7 TCF after drilling two more wells." 

"It is very important to all stakeholders in Papua LNG Project, including the independent State of PNG and its entities, that a firm gas reserve volume is determined and confirmed for future revenue, planning, and budgetary purposes. Therefore, can the Honorable Minister pursue this matter with project developers to resolve the gas reserve volume if it has not been determined?” Peter asked Kua.

In her second question, Governor Peter referred to the Liquid Production and Sales from the Elk/Antelope fields and asked Minister Kua who will be the owners and beneficiaries from the revenue and sales from of the liquid production and sales, which she believes was not addressed in the Project agreement.

“The Elk/Antelope Gas field is a wet gas field, meaning that when the gas is brought to the surface from the reservoir, the liquid drop out from the gas, which is light oil and Liquefied Petroleum Gas (LPG), the Papua LNG Project will build a separate 10-inch pipeline to transport the liquid from the field to the LNG Plant at Caution Bay. My question is who will own and benefit from the revenue sales from the Liquid?”

In his response Minister Responsible Kerenga Kua in relation to the first question on gas reserves stated.

“The 10.3 trillion cubic feet (TCF) of Gas is the foundation volume for the purpose of Resource Contracts Fiscal Stabilization Act 2000. Our law requires the state to provide fiscal guarantee to mega resource project with a fixed time frame or a fixed amount or volume of resource to be extracted under that specific fiscal guarantee for that specific project in this cast the Papua LNG.”

Minister Kua went on to highlight that the 10.3 TCF is the highest estimate that JV Partners can provide of what the Elk/Antelope fields may hold and this volume is contracted under the Papua LNG Gas Agreement, to be produced and sold from the project fields.

“Mr. Speaker, Interoil in the past have conducted drilling and well tests and there have been varying degrees of results from what has been stated by the Governor of Central which is 11.3 TCF, the structure and composition of Elk/Antelope fields pose major challenges to drilling programs in the past and results have had wide margins of differences. However since Total Energies took ownership of the PRL 15 License work towards ascertaining reserves has become clearer.”

Kua revealed that his department has had very detailed technical consultation and workshops with Total Energies and the JV partners since 2022 on the sub-surface technical matters, and 6.7 TCF 2P reserves is "very responsible" at this stage on the volume of the gas.

“As I have mentioned earlier in this Parliament ADPL has been launched, application for a Development Petroleum License has been lodged and detailed technical reviews are been undertaken by my department, which will lead to reserve certification, as I have been advised the department is satisfied with 6.2 TCF 2P reserves at this stage.”

In relation to the Central Governor's question on liquid production and sales, the Minister responded that the Elk/Antelope fields have a combined resource estimate in the range of 6.7 TCF gas 2P reserves, including 98 to 120 million barrels of condensate, so both of these have been estimated separately. 

“The liquids are part of gas reserves in the ground, and when produced they can be separated. The title or ownership of petroleum produced from the PDL passes to JV participants in proportion to their participating interests at the well head,” Kua said.

The Minister said that the APDL application is for two separate pipelines, one for the gas and liquid and the other for the condensate, to transport both separately from the processing facility to the PNG LNG Plant site to be further conditioned for sale.

The project JV partners including the state through Kumul Petroleum Holdings Ltd. (KPHL) and landowners through MRDC are owners of gas and liquid in proportion to their participating interest and will benefit from the sales, Kua said.

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