PNG Plans To Develop Three Trillion Cubic Foot Shale Gas Reserves

Draft policy to guide process being prepared

PORT MORESBY, Papua New Guinea (PNG Post-Courier, July 7, 2016) – Papua New Guinea has resolved to develop its potential billion dollar shale gas reserves containing more than three trillion cubic feet of gas as soon as practicable.

The cost is compatible to the current largest ever investment undertaken here in the liquefied natural gas project worth US$19 billion (K61bn).

However, the overheads could be the sticking point considering the nature of shale, or unconventional gas extraction, the cost effectiveness which is yet to be determined with the intention of being developed and exported at lesser or comparable production costs.

Plans to develop were announced yesterday by Petroleum and Energy Minister Ben Micah at the opening of PNG’s investment portfolio into the higher rung of global gas energy producers besides the only other international shale exporter the United States.

Unconventional natural gas deposits are in general often lower in resource concentration, more dispersed over large areas, and require well stimulation or some other extraction or conversion technology.

Mr Micah told a news conference in Port Moresby that PNG was taking the initiative based on sound groundwork it had already undertaken.

Included is the draft policy on shale gas development, the legislative framework, investor involvement and final development criteria.

In doing so Mr Micah has signed instruments that have placed in reserve significant blocks in the Southern Highlands, Hela, Gulf and Western Provinces for the development of unconventional hydrocarbons to allow for shale gas exploration and production. A review on the potential of unconventional hydrocarbon was proposed to the former Minister William Duma in 2011 and after a thorough determination by the Department, it was recommended that the notice to reserve the blocks be granted which was signed last week in Port Moresby.

Mr Micah said the identified blocks have the potential for shale gas and licences should be granted for further exploration. He said this discovery had the potential to triple the available gas resources in the country both from conventional and unconventional gas resources.

"My department will be holding stakeholder workshops to establish how commercial arrangements can be reached with conventional gas license holders and proposed unconventional gas developers.

"I will be proposing to Cabinet for Kumul Petroleum, the State owned oil and gas company to play a leading role in developing this new unconventional hydrocarbon initiative. I will also be inviting investors with the technical knowhow and financial resources to invest which will then continue to expand the oil and gas industry in the country."

Mr Micah said the legislation for unconventional gas development was passed last year by Parliament and the necessary regulations to effect the law was being discussed with all stakeholders before going to Cabinet.

He said once this is gazetted, interested investors will then submit license applications for the exploration and development of shale gas.

PNG Post-Courier
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