The company has recorded strong growth in production and profitability over the past four years, driven by higher oil production, cost reductions and high oil prices, Oil Search told a UBS Resources conference this week.
“Growth outlook looks strong, driven by further production growth, field developments in PNG and Yemen, gas commercialisation and active exploration,” the company said in a statement.
Oil Seearch is developing a new core area in Yemen but its production is still built squarely on its PNG assets.
Despite a largely mature asset base, over the past two years, Oil Search has added 10,000 barrels of oil per day to production from its Kutubu field, 5000 to 8000 bopd to Moran and over 3000 to the Gobe fields.
In addition, the company has reduced direct field operating costs by 8% and drilling costs by 15%, it claimed.
It has found new reserves at Kutubu, Moran and SE Gobe and discovered NW Moran and begun development of that field. It has also started development of SE Mananda.
SE Mananda was discovered in 1991. While the field is very close to the Kutubu facilities, it lies on the other side of the very deep Hegigio Gorge, so the previous operator deemed it to be uncommercial.
In 2003, following the PNG Government’s introduction of a marginal field tax regime to encourage the development of smaller oil fields, and the transfer of operatorship, Oil Search began detailed technical and engineering studies on SE Mananda.
“This work confirmed that the field was economic based on a low-cost development and incorporating an appropriate fiscal regime,” the company said.
A development plan, involving bringing SE Mananda onstream before the end of 2005 at production rates ramping up to around 10,000 bopd was sanctioned in 2004 and the fiscal and regulatory framework agreed with the PNG Government in early 2005. The SE Mananda development in now underway.
Total recoverable field reserves as at January 2005, as audited by Netherland Sewell and Associates, are 20.8 million barrels.
Oil Search said it had taken a fit-for-purpose approach to the development, emphasising close integration between the subsurface, facilities and drilling engineering staff. The pipeline will cross the Hegigio Gorge by a pipe suspension bridge.
Under this development, which is based on primary recovery only, about 10 million barrels are recoverable. But once production history from the project has been established, secondary recovery by water injection will be considered, Oil Search said.
The company's interest in this development, located in PDL-2, is 84.17%, which increased from 71.9% following ExxonMobil's decision not to participate. The other partners are Merlin Petroleum Company 6.78% and Petroleum Resources Kutubu Limited 6.75%.
