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GAS COMMERCIALISATION – Oil Search Limited

Oil Search Limited · Nov 1, 2007 · 55 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. GAS COMMERCIALISATION – Oil Search Limited – slide 1
    OIL SEARCH LIMITED Gas Commercialisation October/November 2007 8
  2. GAS COMMERCIALISATION – Oil Search Limited – slide 2
    Outline Gas Resources in PNG LNG markets ExxonMobil LNG Project Gas Growth Initiatives 9
  3. GAS COMMERCIALISATION – Oil Search Limited – slide 3
    Oil Searchs Gas Agenda Progress ExxonMobil LNG development with FEED entry Develop ancillary gas business Additional LNG trains/plants over time Active programme to secure and/or find further certifiable reserves Review options…
  4. GAS COMMERCIALISATION – Oil Search Limited – slide 4
    Gas Resources in PNG 11
  5. GAS COMMERCIALISATION – Oil Search Limited – slide 5
    Juha Hides Angore Moran Kutubu Existing gas Gobe fields, gas exploration Korobosea Barikewa and appraisal Kimu Iehi opportunities Uramu Flinders Pandora 12
  6. GAS COMMERCIALISATION – Oil Search Limited – slide 6
    Gas Resources (Gross PNG) Elevala Recoverable Gas 30 Ketu Pandora 25 Uramu Kimu Barikewa 20 P'nyang tcf Angore 15 Juha Hides 10 SE Gobe Gobe Main 5 Moran Agogo 0 SE Mananda 1P 2P 3P Kutubu Current 3P gas…
  7. GAS COMMERCIALISATION – Oil Search Limited – slide 7
    PNG Gas Resources Current 2P gas resources of approx 14 tcf Significant condensate/liquids in conjunction with Highlands gas Sufficient resources for sequential multi-train LNG development A prudent mix of appraisal and…
  8. GAS COMMERCIALISATION – Oil Search Limited – slide 8
    Key Fields Hides Gas Field Greater Hides WI % Esso Highlands 47.5 (Operator) Oil Search 27.5 Santos Ltd. 25.0 World class gas and gas condensate field discovered in 1987 4 wells + 1 Sidetrack, 120 km 2D seismic. 2 Producers…
  9. GAS COMMERCIALISATION – Oil Search Limited – slide 9
    Key Fields PRL 11 - Angore Gas Field PRL 11 WI % ExxonMobil 47.5 (Operator) Oil Search 52.5 Angore 1 discovery well drilled in 1990 Condensate volumes estimate based on average CGR of 15 bbls/mmscf Low field development…
  10. GAS COMMERCIALISATION – Oil Search Limited – slide 10
    Key Fields Kutubu & Agogo Gas Kutubu gas production capacity of 170 mmscf Gas developments assume new gas conditioning plant is required at CPF Minimum field capital depending on blowdown rate May only require dehydration…
  11. GAS COMMERCIALISATION – Oil Search Limited – slide 11
    Key Fields Moran Unit Gas Currently re-injecting 100% of Moran gas for pressure support Agogo gas production used to supplement pressure support to 100- 110 mmscfd Moran gas available for gas development supply ca. 2020 to…
  12. GAS COMMERCIALISATION – Oil Search Limited – slide 12
    Key fields Gobe Main & SEG Unit Gas GM and SEG fields: 3 gas injectors 2 water disposal wells 17 production wells Gas conditioning plant and 10 km pipeline tie- in to main gas line required for gas development May only…
  13. GAS COMMERCIALISATION – Oil Search Limited – slide 13
    Key fields PRL 2 - Juha Gas Field PRL 2 WI % ExxonMobil (Operator) 56.0 Oil Search 31.5 Juha-3X Merlin Petroleum 12.5 Juha 4ST1 Juha 5 Discovered in 1983 Juha-2X Condensate reserves estimate based on average CGR = 60…
  14. GAS COMMERCIALISATION – Oil Search Limited – slide 14
    LNG markets and PNGs positioning 21
  15. GAS COMMERCIALISATION – Oil Search Limited – slide 15
    LNG market is changing Middle East Atlantic Basin New supplies from Asia Pacific can move in 2 directions within Asia and to Supplies from the Middle East can go in Asia Pacific the US West Coast 3 directions USGC…
  16. GAS COMMERCIALISATION – Oil Search Limited – slide 16
    Theres an Asia-Pacific opportunity Regional market Asia-Pacific Supply Demand fundamentals are robust 230 Steady expansion from Demand existing markets 210 (WoodMac) Burgeoning growth from emerging markets of India & China 190…
  17. GAS COMMERCIALISATION – Oil Search Limited – slide 17
    Supply will remain tight until next decade Only one project made it to FID in 2006 (Peru LNG). Two so far in 2007 (Skikda rebuild and Pluto) New LNG supply will remain scarce until 2012- 13 when greenfield projects come onstream…
  18. GAS COMMERCIALISATION – Oil Search Limited – slide 18
    Challenges ahead for greenfield projects Continuous construction cost increase Environmental issues PROJECTS DELAYED Challenging conditions/locations Political issues Liquefaction Plants Construction Costs: Where Next 1400…
  19. GAS COMMERCIALISATION – Oil Search Limited – slide 19
    LNG prices have risen Higher oil prices mean higher natural gas prices directionally, though gas prices are capped by competition from coal and nuclear at the burner tip, especially in the longer term. Construction costs have risen…
  20. GAS COMMERCIALISATION – Oil Search Limited – slide 20
    High prices and high future demand FACTS view of the future is a HH price of US7-9/mmbtu (real) long term, despite the current weak prices. However, prices may rise and fall with oil prices Can the consumer pay US7-9/mmbtu or higher…
  21. GAS COMMERCIALISATION – Oil Search Limited – slide 21
    Higher long-term price benchmarks Analysis of Recent Contracts to Japan and Korea (DES) December 06 Sellers are now positioning between these markers LNG (/mmbtu) April - May 06 Mar - May 06 Oct 05 - Mar 06 JCC…
  22. GAS COMMERCIALISATION – Oil Search Limited – slide 22
    LNG pricing relative to oil 14 12 Crude Oil Parity 10 LNG (/mmbtu) NWS Recent Contracting 8 6 NWS Traditional Contracting 4 2 0 10 15 20 25 30 35 40 45 50 55 60 65 70 JCC (/bbl) 29 Source: FACTS Global…
  23. GAS COMMERCIALISATION – Oil Search Limited – slide 23
    PNG has competitive advantages Quality and location of resource makes PNG very competitive in project line up for a 2013 2014 development timetable Advantages of LNG from PNG Highlands: Substantial certified reserve base,…
  24. GAS COMMERCIALISATION – Oil Search Limited – slide 24
    PNG well placed geographically PNGs geographical location & stability make it an ideal supplier 31
  25. GAS COMMERCIALISATION – Oil Search Limited – slide 25
    LNG Project in PNG 32
  26. GAS COMMERCIALISATION – Oil Search Limited – slide 26
    LNG with ExxonMobil Summary ExxonMobil Pre-FEED review progressing well - strong momentum Participants in LNG pre-FEED are Hides/Angore/ Juha/ Kutubu/ Agogo/ Moran/Gobe Main JVs. OSHs funding share is 36.6%. Interest post Government…
  27. GAS COMMERCIALISATION – Oil Search Limited – slide 27
    ExxonMobil-led LNG Project 75km Capacity: 6.3 mtpa Juha 250 mmscfd (nominal) Hides & 960 mmscfd Conditioning Plant Angore Indicative capital 8-inch condensate line 66 km cost: US10 bn 14-inch Kutubu & Agogo gas line…
  28. GAS COMMERCIALISATION – Oil Search Limited – slide 28
    Whats being done.. Activities underway include: Plant size & technology Site Gas resource Unitisation Commercial JV framework Fiscal regime & State deliverables Finance Marketing Benefits Interface with the existing Oil…
  29. GAS COMMERCIALISATION – Oil Search Limited – slide 29
    Plant Size & Technology Owners have considered the number and size of trains for the initial development Currently certified resource supports an initial 6.3 mmpta LNG development Owners elected to run dual pre-FEEDs in order to…
  30. GAS COMMERCIALISATION – Oil Search Limited – slide 30
    LNG Plant Site Site selection and land tenure issues have been considered World-scale LNG plant 11 potential sites were evaluated, with a focus on coastal locations in the south Site near Port Moresby (portion 152, near Konebada…
  31. GAS COMMERCIALISATION – Oil Search Limited – slide 31
    Upstream: Production Facilities and Pipelines Wells: Hides Angore Juha Gas production facilities: Hides Gas Conditioning Plant (HGCP) Juha Production Facility (JPF) Measurement of gas/condensate for sale purposes Pipelines:…
  32. GAS COMMERCIALISATION – Oil Search Limited – slide 32
    Downstream: LNG Facility LNG facility and loading terminal: LNG facility will be located on State Portion 152 near Port Moresby LNG facilitygas will be cooled to extremely low temperature to form liquefied natural gas (LNG) LNG is…
  33. GAS COMMERCIALISATION – Oil Search Limited – slide 33
    Reserves Cover for LNG Circa 1 bcf/d for initial LNG (6.3 mmtpa) development for 20-30 years 7-10+ tcf total Total Circa 9 tcf available (certified) provides: Circa 14 years of 1P at plateau Circa 20 years of 2P at plateau Juha…
  34. GAS COMMERCIALISATION – Oil Search Limited – slide 34
    Unitisation Unitisation and cooperative development is required to proceed to FEED Methodology under discussion Indicative unitisation is as follows: Cost Sharing Indicative Agreement Unitisation* ExxonMobil 42.5% 30-34% Oil…
  35. GAS COMMERCIALISATION – Oil Search Limited – slide 35
    Project Structure LNG Project is a fully Ship integrated JV Common Facility JV KGAM Oilfields TRAIN 1 Gas Development TRAIN 2 Pipeline JV Hides/Angore Development Additional TRAINS () Juha Development New Field Dev…
  36. GAS COMMERCIALISATION – Oil Search Limited – slide 36
    Fiscal Terms and State Deliverables Early gas commercialisation is a priority for the returned Somare government Discussions on fiscal terms and other conditions now well underway PNG Gas Project (Pipeline to Australia) signed a gas…
  37. GAS COMMERCIALISATION – Oil Search Limited – slide 37
    Finance Workable finance plan required by FEED entry Likely to involve multilateral agencies and commercial banks State equity is fundamental Finance plan under development Advisor appointed for phase 1 Project based finance…
  38. GAS COMMERCIALISATION – Oil Search Limited – slide 38
    Marketing Owners considering approach to marketing and discussing framework as part of commercial discussions Expect to commence discussions with potential customers in early 2008, post FEED decision 45
  39. GAS COMMERCIALISATION – Oil Search Limited – slide 39
    LNG Project Schedule 2007 2008 2009 2010 2011 2012 2013 2014 Pre-FEED FEED Program & EPC Contracting PNG Government Approvals Benefits Sharing Agreement Project Financing & Marketing Detailed Engineering First Design…
  40. GAS COMMERCIALISATION – Oil Search Limited – slide 40
    LNG Project Production 70 1800 Indicative profile 1600 reflects initial 60 Condensate estimate of 1400 recoverable gas 50 LNG 1200 LNG energy value and condensate ve 40 1000 ti mmboe la production u m 30 800…
  41. GAS COMMERCIALISATION – Oil Search Limited – slide 41
    Other Potential LNG Projects InterOil-Merrill Sponsors continue to express confidence Relies on gas from Elk Separate plant location near IOL Refinery BG MOU with Oil Search lapsed at end of October Reflects progress with…
  42. GAS COMMERCIALISATION – Oil Search Limited – slide 42
    Gas Growth Strategic Opportunity 49
  43. GAS COMMERCIALISATION – Oil Search Limited – slide 43
    Gas Growth Strategy Build gas resource base for: LNG expansion, or: Alternative, complementary and possibly accelerated gas development. By: Prudently exploring and appraising in existing licences. Increasing Oil Search equity in…
  44. GAS COMMERCIALISATION – Oil Search Limited – slide 44
    Foreland Hub Forelands Juha Angore Hub Pnyang Kimu (0.85 tcf) OSH 60.7% Barikewa (0.72 tcf) OSH 42.5% Korobosea (0.5 tcf) Iehi OSH 90% Uramu Increase equity in Korobosea licences (eg Kimu) Kimu Barikewa Farm-in…
  45. GAS COMMERCIALISATION – Oil Search Limited – slide 45
    PRL 8 - Kimu Gas Field PPL240 PRL 8 WI % Oil Search 60.7 PRL08 Mosaic Oil Niugini 28.6 Cue Energy 10.7 Drilled in 1998/99 by Oil Search intersected a 30m gross gas column 70km new seismic acquired Q3 2007 Seismic currently…
  46. GAS COMMERCIALISATION – Oil Search Limited – slide 46
    PPL 240 - Korobosea PPL 240 WI % KOROBOSEA Oil Search 90.0 Gedd 10.0 Korobosea well will test prospect along trend from KIMU Kimu gas discovery Prospect is well defined by seismic (9 lines of good PRL08 quality) Reservoir…
  47. GAS COMMERCIALISATION – Oil Search Limited – slide 47
    PPL 240 - Korobosea Korobosea Prospect covers 20+km and is well defined by seismic Korobosea-1 spudded 22nd October Scheduled to intersect Alene and Toro reservoirs in early November SW Korobosea NE Darai Lmst Alene…
  48. GAS COMMERCIALISATION – Oil Search Limited – slide 48
    PRL 9 - Barikewa Gas Field PRL 9 WI % PRL09 PPL246 Santos 42.6 Oil Search 42.6 Cue 14.8 2 Barikewa 1 Reserves 1P 2P 3P Gas (bcf) 150 720 1500 Barikewa A Discovery well drilled in 1956 BARIKEWA Hedinia tested 10 mmscf/d Toro…
  49. GAS COMMERCIALISATION – Oil Search Limited – slide 49
    Offshore Hub Offshore Hub Juha Angore Pnyang Uramu (0.37 tcf) OSH 49.5% Pandora (1.5 tcf) OSH 5% Iehi 3D seismic scheduled to firm up resource size Uramu Near field exploration Korobosea APPL293 opportunities Kimu Flinders…
  50. GAS COMMERCIALISATION – Oil Search Limited – slide 50
    PRL 1 - Pandora Gas Field PRL 1 WI % 947 948 949 F G Pandora B1X B Talisman Oil Ltd 48.2 1019 1020 1021 Oil Search 5.0 J Pandora 1X A ExxonMobil 16.4 Command Petroleum 12.7 1091 1092 C (Cairn) D Claremont Petroleum…
  51. GAS COMMERCIALISATION – Oil Search Limited – slide 51
    PRL 10 - Uramu Gas Field PRL 10 WI % Oil Search 49.5 ML Energy Investment URAMU 40.5 Fund Upstream (PNG) Gedd (PNG) Ltd 10.0 Reserves 1P 2P Gas (bcf) 275 370 Drilled in 1968 by Phillips water depth 6-10 metres 3 km…
  52. GAS COMMERCIALISATION – Oil Search Limited – slide 52
    PPL 244 Flinders Prospect PPL 244 WI % Talisman Oil Ltd 35.0 Oil Search 40.0 SP Interoil 15.0 FLINDERS Drillsearch Energy 5.0 IOR Exploration 5.0 In Place P90 Mean P10 Gas (bcf) 400 1800 3900 Liquids 29 140 230 (mmbbl)…
  53. GAS COMMERCIALISATION – Oil Search Limited – slide 53
    PPL 234 PPL 234 WI % Oil Search 100 PPL234 2008 Seismic SW NE Licence to immediate east of Flinders prospect (PPL244) Flinders Gas Chimney Same primary target as Flinders the Tertiary clastic sequence Several leads…
  54. GAS COMMERCIALISATION – Oil Search Limited – slide 54
    APPL 293 APPL 293 WI % APPL293 Oil Search 80 Nippon Oil Exploration 20 Ltd Application made during 2007 Gulf of Papua licencing round. Currently awaiting licence award Covers the offshore/SE extension of the Aure fold…
  55. GAS COMMERCIALISATION – Oil Search Limited – slide 55
    Commercialisation Options Oil Search continues to drive the following alternative, complementary and possibly accelerated commercialisation options: LNG expansion: Higher net OSH equity based on upstream fields Commercial and…

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