Oil Search reaffirms belief in PNG

ONE of the largest resources inves tors in Papua New Guinea has reaffirmed its belief in the future of the country, despite the gloomy political outlook in view of the protrac ted Bougainville situation.

The recently issued annual report of Oil Search Ltd, which has spent several decades exploring Papua New Guinea for oil, said the Kutubu oil project has proven reserves currently assessed at around 200 million barrels. This rep resents an approximate 50 per cent increase over the figure quoted in last year’s report, and is up 20 million barrels on the figure of just two months earlier.

Oil Search said the company saw it as increasingly desirable to cement the bonds between itself and Papua New Guinea. This was helped by the share issue to local investors in late 1990.

The report said ongoing feasibility studies at Kutubu continued to fine-tune development plans so that the initial production rate will be raised from an estimated less than 100,000 barrels a day to about 130,000 barrels a day.

The project will cost about US$75O million to develop. Planned production now dwarfs any of the Australian discoveries of recent years.

By the end of January the joint ventures had committed about SUS3OO million to the project with some 600 workers, of which about 60 per cent are Southern Highlands employees. The crude will be piped 265 kilometres to a

marine terminal in the Gulf of Papua with international sales expected to start in the second half of next year, oil Search also reported some good neW s, and problems, with its Hides gas project which is expected to provide 10 million cubic feet of gas a day for a power station to provide electricity for the p org era gold mine. Recent drill tests indicated the Hides field would produce about 300 barrels a day of condensate as against earlier expectations of 20 barrels a day. Some surface facilities have had to be redesigned to cope with storage of the condensate. Construction of the Hides project should be completed by the end of the year. By then the Porgera joint venture should have built its power station and associated transmission lines.

During 990 QU Search was a partner in 15 well drillings in its Highlands acreage. With the confirmation of re serves in the Kutubu project, the corn pany’s attention is now swinging back to PPL 101, a neighbouring permit area which contains the Juha gas condensate discovery and several untested prospects.

One of these untested areas, P’nyang, was chosen for drilling in 1990.

The annual report said the well was encouraging: gas and condensate were discovered, and were similar in compo sition to the gas caps of the Kutubu oil fields. The report said the quality of Toro and other reservoirs in P’nyang was as good as Kutubu. A follow up well was due to be drilled toward mid-1991. □