Construction and development of an LNG industry would include refrigerated ships and a large processing facility, most likely near Port Moresby, with product to be shipped to markets in the north of Asia and western states of North America.
InterOil’s project partner and international investment bank, Merrill Lynch, previously estimated the project could be delivering LNG cargoes by the second quarter of 2011.
Somare said the project would be a “driving force towards the creation of an industrialised nation, with many benefits including the development of our human resources”.
Elk-1 will be officially declared a discovery by PNG authorities, after technical staff finished their review of drill stem test data, which indicated an “absolute open flow potential” of 28.58 million standard cubic feet of gas per day.
The Government has declared Elk-1 hosts gas and condensate at high pressure, with gas reserves close enough to the coast for development estimated at several trillion cubic feet.
Somare said Elk-1, along with likely discoveries of a similar size, would form the basis of an LNG industry.
“Further positive results may lead to the opening of a new oil and gas basin in PNG,” he said.
“There have been many reports of oil and gas shows in the area surrounding the licences where InterOil is drilling but to date there has not been a well in this area that has exhibited the high gas pressures currently being experienced at Elk-1.
“Both the Government and the company are hopeful that the two to three additional wells that InterOil intends to drill on the Elk and adjoining structures will be a large step forward in confirming the commercial value of the gas field, and that this will accelerate the LNG future in PNG.”
The Government’s endorsement of the Elk-1 discovery comes as it appears increasingly unlikely that the much anticipated PNG gas pipeline project will come to fruition.
Somare said support for InterOil’s LNG aspirations from Merrill Lynch and Clarion Finanz of Switzerland gave him confidence in the project.
He also stressed the need for PNG to be proactive in the development of its natural resources.
“We can’t allow super-major developers to place our projects on a list with many other targets worldwide and leave us on the backburner for decade,” Somare said.
“InterOil’s sometimes unorthodox approach to kick starting projects may be what is needed to bring together some of PNG’s rich but dispersed petroleum assets and overseas investors who are now looking at PNG in a new light.”
InterOil chief executive and chairman Phil Mulacek was confident an economic oil discovery would be made below the gas cap with future drilling.
