Oil Search to boost demand for PNG gas

OIL Search aims to expand domestic demand for Papua New Guinea gas, forecasting an initial market of 150 petajoules per annum in Port Moresby alone once it is tapped into the gas fields.Eventually, the demand would rise to 300 PJ per annum, the company said. Up to 50 PJ per annum had also been earmarked for a potential fertiliser and ammonia industry, seen as central to the aim of basic onshore industry development in the country.The company was pushing ahead with plans for a range of outlets for PNG’s estimated 50 trillion feet of gas. It was confident of delivering gas to Australia through a A$3.5 billion (K8 billion) ExxonMobil-operated pipeline by late 2009, based on a final investment decision before the end of this year, company representatives told a conference in Darwin. But with only 40% of Oil Search’s gas reserves dedicated to the pipeline, it had been working with partners to study the feasibility of other projects, including increased domestic use and export production of compressed natural gas (CNG), dimethyl ether (DME) and even liquefied natural gas (LNG). Oil Search business development manager Jesse Lee said the company was close to a partnership deal with one company on the potential to export CNG to New Zealand, which faced a looming gas crisis as domestic reserves run dry. The company would load gas from the PNG pipeline onto ships in Queensland for delivery on a scale suited to New Zealand’s relatively modest needs. CNG projects can be sized at around 20 PJ per annum rather than the 80 PJ needed for LNG. Oil Search had also co-operated with Japan’s Itochu and Mitsubishi Gas Chemical, which were looking to build a A$800 million (K1.9 billion) petrochemical plant in PNG to co-produce methanol and Dimethyl ether (DME), with first output slated for 2010-11. DME is an environmentally cleaner fuel for power generation, and could be a substitute for diesel and liquefied petroleum gas or as synthetic gasoline.