Santos, Oil Search Reveal PNG LNG Damage
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Last week’s huge earthquake in southwestern PNG will keep the $20 billion PNG LNG project owned by ExxonMobil, Santos and Oil Search’s off the air for eight weeks, perhaps more.
The 7.5 magnitude earthquake struck the PNG highlands late last month, devastating the local area and shutting down the PNG LNG project.
Following early inspections of the project, the operators ExxonMobil and Oil Search say it will take up to eight weeks to get the gas flowing safely once more, after which the joint venture partners will revise their initial production guidance released earlier this year as well as the likely impact on their 2018 earnings and capital.
It is likely as more detailed examination is made of the project’s various bits and pieces the delay could be extended.
Santos shares hardly moved, down 0.6% at $4.89, though they are down from $5.07 a week ago a day after the quake happened. Oil Search Shares ended at $7.19, down 0.4%. They were trading around $7.50 a week ago.
ExxonMobil said despite the severity of the earthquake, the project as a whole remained relatively undamaged and no oil or gas leaks have been recorded, with the main pipeline intact and unaffected.
“The initial response by our workforce, coupled with controlled emergency shutdown systems, safely shut in our facilities, minimising damage to equipment and ensuring there were no release of hydrocarbons,” ExxonMobil PNG managing director Andrew Barry said in a statement.
ExxonMobil’s Hide Gas Conditioning Plant saw the plant’s camp damaged by the quake. While the operation was shut down, damage occurred to a number of pieces of equipment and foundation supports which will need to be inspected and repaired.
“We have assembled a team of technical experts from ExxonMobil’s global workforce to help the local team complete damage evaluation and restore production,” Mr Barry said.
Oil Search stated that its Gobe production facilities and the offshore facilities are unharmed, and it expects production from the gas field to restart within the next one to two weeks.
Its central processing facility is also less damaged than originally thought and can be restarted within the next two to three weeks.
“As a result, production from the Kutubu field is anticipated to be progressively restored over the coming month, subject to the progress of rehabilitation work now underway on the Oil Search-operated Ridge and Moro camps, which is required before the company’s production workforce can return to the site,” Oil Search told the ASX yesterday
The gas wells remain closed however, with the group yet to carry out full inspections due to roads being destroyed by the earthquake, preventing access to the fields.
Santos is providing $200,000, ExxonMobil $US1 million ($1.3 million) and Oil Search $US5 million. Oil Search’s helicopters and personnel have been helping to distribute emergency aid to local villages.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.