Exxon Starts Key Drilling Campaign for $15.7B PNG LNG Project


SYDNEY - ExxonMobil Corp. said Monday it has started drilling for natural gas in a key part of Papua New Guinea to support its $15.7 billion PNG LNG project and possibly underpin its expansion.

Exxon has commenced drilling operations at the Hides natural gas field, located in the impoverished nation's highlands and expected to produce about nine trillion cubic feet of natural gas. The resource will be piped to a liquefied natural gas, or LNG, processing terminal on the coast, where it will be chilled for export and loaded on to tankers bound for China, Japan and Taiwan.

"The start of our drilling program is a key step in meeting our goal of first LNG deliveries in 2014," said project drilling manager Jim McDermott.

Australian project partner Oil Search Ltd. has said the Hides drilling program could build enough resources to support a possible expansion of PNG LNG to three production units from the currently planned two.

Early in the drilling program, two separate wells in the southern and northern sections of the field will be drilled to establish the location of the gas/water contact and delineate the size of the Hides gas field. Funds have also been allocated to evaluate the potential of deeper sands in the Hides structure.

"The aim of the Highlands program is to evaluate the area's gas potential and build a resource base to underwrite further gas development and LNG expansion opportunities," Oil Search said last month.

Copyright (c) 2012 Dow Jones & Company, Inc.


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