Experienced PNG oil and gas explorers expressed scepticism at this extremely tight timetable, but the highly experienced chief executive-elect of InterOil subsidiary PNG LNG Inc, Dr Jack Hamilton, was just as confidence he could meet these deadlines.
Hamilton told a record audience of more than 500 people at the ninth PNG Mining & Petroleum Conference in Sydney that such a timetable was possibly inconceivable for an oil major but he could cut six months from normal development processes.
In the most upbeat announcement of the day, the former LNG development supremo at Woodside Petroleum admitted that further drilling needed to be carried out at InterOil’s gas-condensate Elk discovery to prove up total reserves there.
But he said the company could also seek additional gas from other potential PNG suppliers and company executives were confident Elk could deliver the minimum 5 trillion cubic feet needed for operation of a single LNG train.
InterOil’s partner, Merrill Lynch Commodities, had previously signalled at a recent LNG conference in Rome that it was anticipating first delivery from PNG in 2011.
For the first time, this was officially confirmed by Hamilton.
He said work has been progressing on several front, including marketing and project execution, over the past six months. Seven experienced contractors have expressed an interest in building the plant.
He said design and front-end engineering work was expected to be completed by the third quarter of next year with financial closure anticipated by the end of 2008.
This would enable the first train to come onstream in 2011 and the second train a year later.
Hamilton said Merrill Lynch, one of the two other InterOil partners, has agreed to take up 4 million tonnes of LNG annually from PNG if necessary, greatly easing the company’s marketing task.
The third partner in the venture is long-term InterOil backer, Switzerland’s Clarion Finance, through an operating subsidiary, Pacific LNG.
Base load gas supplies from Elk was expected to be piped to a facility next to InterOil’s Napa Napa refinery, where export processing of propane and butane (LPG) would also take place.
Hamilton said this timetable would enable PNG to become the 15th country in the world to export LNG, which is now a $US60 billion a year global business activity.
He said there was a global “window of opportunity” during the 2010-15 period when overall LNG output was expected to slacken even though demand continued to rise.
Hamilton predicted that by next year at least 10 new projects would target to commence supplies in 2015 from global reserves that are adequate for another 80 years of supply.