The pre-FEED study, which is expected to be completed by the end of this year, will evaluate the technical and commercial merits of developing a 5-6.5 million tonne per annum LNG facility with first deliveries targeted for 2012-13.
It will also determine the best LNG facility development concept, select the preferred site location, settle on the best field configuration and unitisation framework, and deciding on fiscal terms with the PNG Government.
The Hides gas and condensate field is expected to underpin the development with additional gas sourced from the nearby Angore and Juha fields.
Oil Search managing director Peter Botten said in a statement: “This agreement represents another step forward in the commercialisation of the large PNG gas resources through the development of a world-scale LNG industry in PNG.”
The company said about $US60 million will be spent on the LNG project studies over the next year.
As part of the agreement, Santos will buy data associated with the FEED study, which was previously undertaken for the upstream portion of the PNG Gas Project.
The joint venture partners in the three fields have also agreed to reimburse ExxonMobil a proportionate share of costs that it has incurred to date for LNG work.
Partners in the initial cost-sharing agreement are ExxonMobil (49%), Oil Search (32%), Santos (17%) and Nippon Oil (2%). The PDL 2 participants also have an option, up until the end of June, to take part in the studies.
ExxonMobil had completed an earlier study that showed that there were sufficient reserves in the Hides and Angore fields to underwrite a “single mid-sized train LNG development”.
