RIFT OIL, Drilling for Oil in Papua New Guinea

PNG bids to spike exploration
from: Offshore Engineer
by: John Mueller
Tuesday, November 21, 2006
Papua New Guinea has entered the competitive world of petroleum concessions in a big way, promoting extensive acreage in the nation's first licence bidding round, launched in September. John Mueller was among the observers when the PNG roadshow made its inaugural appearance in Singapore.

Due to concerns over gas export pipeline development difficulties and the decline in oil production from the Kutubu, Gobe and Moran oil fields since 2003 - with the Asian Development Bank, for one, forecasting an overall oil output drop in the country in 2007 - the Papua New Guinea government has introduced more amenable fiscal terms to encourage exploratory activity.
Fifteen blocks, covering 107,000km2 onshore and offshore are up for grabs, located in the Gulf of Papua and Papuan Plateau, selected because of their prospectivity and proximity to discoveries in the Papuan Basin.

New fiscal incentives have been introduced for the petroleum exploration and production sector in recognition of the difficulty of exploring and operating in rugged and remote territory where there is a lack of infrastructure and unease over moderate oil production from relatively few fields.

This push to attract more investors was given a significant boost by a recent comprehensive study of the frontier region of the deepwater Gulf of Papua and surrounding area.

Reinforcing the study were a new seismic survey of around 4500 line-km and reappraisal of 30,000km of old seismic data undertaken by Fugro Multi Client Services, all of which is included in the bid package.

The Singapore bid round launch was well attended, attracting executives from more than 30 oil and gas companies including Chevron, Petronas, British Gas, CNPC, Hunt Oil, Korea Gas, Mitsubishi Oil, Nippon Oil Exploration, Repsol, Premier Oil and Singapore Petroleum. The release takes in shallow and deepwater areas and adjoining onshore blocks.Water depths vary from 20m in the west, near the mouth of the Fly river, to over 2500m in the eastern frontier region.

The 15 blocks, grouped in the western and eastern regions of the Gulf of Papua, cover three general areas.

In the west, blocks L, M, N, O, J and K, ranging in size from 4300-6800km2, are largely onshore and include shallow waters of the northwestern Gulf.

In the east, blocks A, B, C, and D, 1900-6400km2 in extent, are located almost entirely onshore, following the coastline of a section of the southeastern shore of the Gulf.

The remaining blocks - E, F, G, H and I - are all offshore in the eastern and deepwater sections of the Gulf and vary in size from 10,300km2 to 11,700km2.

The bid package comprises more than 200 reports, 5000km of open file seismic transparencies, around 40 digital well logs with formation tops and gravity and magnetic, topographic and geological maps. Also included are a navigation database for historical seismic recorded in the Gulf of Papua, preliminary information to help contractors fulfill landowner and social mapping requirements, play concepts and leads and a map showing the location of oil seeps within the onshore licensing round blocks along the scarps of the Gulf of Papua.

Purchase of a bid package is a mandatory pre-qualification for any bidder, costing $65,000 each.

Bids are submitted on a work programme basis over a six-year term, split into three two-year phases, the first phase a firm commitment with the option to surrender the permit any time thereafter. In the event of a discovery, a development licence can be applied for. Relinquishment of 50% of a permit area is required after six years if no discovery is made.

Data has been assembled into a bid package and a data package, containing reprocessed and new seismic, available on DVDs. Awards will be made within two months after the close of the licensing round on 13 April 2007.

Fiscal incentives
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