Exxon Mobil Initiates LNG Production from $19 Billion Project in Papua New Guinea

Written by Edward Weatherly for Industrial Info Resources (Sugar Land, Texas)--Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and its joint venture partners have started initial liquefied natural gas (LNG) production from their $19 billion PNG LNG project, located near Port Moresby, Papua New Guinea. The LNG production is ahead of schedule and is expected to ramp up to full production over the next few weeks.

The new production is from the first train of a dual LNG production train facility, with a total capacity to produce 6.9 million tonnes per annum of the cryogenic liquid. The first full shipment from the PNG LNG plant will depart for the Asian markets before the end of second-quarter 2014.

LNG demand in the Asian markets is expected to rise about 165% between 2010 and 2025, to a total of 370 million tons per year. Construction on the second train is progressing as well, and initial production should begin in the next several weeks.

In addition to the two LNG production trains, the project features two 160,000-cubic-meter LNG storage tanks and a marine loading terminal to accommodate LNG carriers of up to 220,000-cubic-meter load capacity. The plant, which is located 20 kilometers northwest of Port Moresby at Caution Bay, on the southern coast of PNG's Central province, will source its natural gas through a 700-kilometer (435-mile) system of pipelines connecting it to upstream production and processing facilities, including the Hides Gas Conditioning Plant in the Southern Highlands and facilities in the Hela and western Gulf provinces.

Due to minimal pre-existing infrastructure and geographic factors, some of the pipelines and other equipment had to be airlifted into place from a newly constructed airfield, as well as new roads and communications lines, to enable the completion of the upstream portion of the PNG LNG project.

Over the 30-year lifespan of the project, Exxon Mobil and its partners expect the project to produce more than 9 trillion cubic feet of natural gas that is to be used in the production of LNG, and a lesser amount of condensate. At the peak of its construction, more than 9,000 PNG citizens were employed on project-related activities, of which approximately 5,600 were in that capacity at the end of 2013. When operational, approximately 150 operators and maintenance technicians will be employed, operating and maintaining the Hides Gas Conditioning Plant and the LNG plant.

The PNG LNG facility will be operated by an Exxon Mobil affiliate, Exxon Mobil PNG LNG Limited, which will own 33.2%. The other joint-venture owners are Oil Search Limited (ASX:OSH) (Sydney, Australia), with 29%; the PNG government-owned company, Independent Public Business Corporation, with 16.6%; Santos Limited (ASX:STO) (Adelaide, Australia), with 13.5%; Nippon Oil & Energy Corporation (TYO:5001) (Tokyo, Japan), with 4.7%; PNG's Mineral Resources Development Company, with 2.8%; and PNG national oil company Petromin, with 0.2%.

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