ExxonMobil-Led Consortium to Develop LNG Project in Papua New Guinea

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Researched by Industrial Info Resources (Sugar Land, Texas)--ExxonMobil Corporation (NYSE:XOM) (Irving, Texas), through its wholly owned subsidiary Esso Highlands Limited (Port Moresby, Papua New Guinea), is planning to construct a new liquefied natural gas (LNG) production and export project called PNG LNG to be located in Papua New Guinea. The proposed $15 billion PNG LNG project will be an integrated natural gas production, processing, transportation, liquefaction and export project with a capacity of 6.2 million to 6.3 million tons per year of LNG production capacity. The project's proposed capital costs makes PNG LNG one of the larger LNG projects being proposed at the present time and the third largest project in the region, behind the $30 billion Browse LNG project and the $20 billion Gorgon LNG project, both of which will be located off of Australia's northwest shelf, which is rich in natural gas.

Esso Highlands will award the engineering, procurement and construction (EPC) contract for the liquefaction plant to the Houston, Texas, office of Bechtel Group Incorporated (San Francisco, California) or Chiyoda Corporation (TYO:6366) of Yokohama-shi, Japan. Esso Highlands expects to formally award the EPC contract to one of the participants in late 2009. The successful bidder is expected to begin construction on the liquefaction portion of the PNG LNG project in 2010. Esso Highlands has already awarded the front end engineering and design (FEED) contract for the upstream portion of the PNG LNG project to a joint venture of KBR (NYSE:KBR) (Houston, Texas) and WorleyParsons Corporation, the U.S. subsidiary of Australian company WorleyParsons Limited (ASX:WOR) (North Sydney). The EPC contracts for the upstream portion, including the 960 million-cubic-foot-per-day Hides gas plant are expected to be awarded in late 2009 as well. Completion of the PNG LNG project and first LNG shipments are expected to begin in late 2013 or early 2014.

The scope of the PNG LNG project will also include a production facility to be located in Juda with a capacity of 250 million cubic feet per day and more than 700 kilometers of new 32-inch-diameter natural-gas pipelines. Six natural-gas- and/or oil-production fields will be modified or constructed to supply the feed. A new condensate-production and export facility, as well as an LPG proposal are being considered as a part of the PNG LNG project. The main liquefaction facility will be located in State Portion 152, approximately 20 miles from Port Moresby. The liquefaction facility will have two LNG production trains, two 125,000-cubic-meter LNG storage tanks, two 50,000-barrel condensate storage tanks and marine-loading facilities including a 2.3-kilometer LNG trestle.

The project benefits to Papua New Guinea are expected to be in the form of approximately $31.7 billion to the government and landowners during the PNG LNG 30-year project life. During the construction phase, approximately 7,500 new jobs will be created, and in the post-construction phase 850 full-time positions will be created directly by the construction of the project.

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