Doubt over InterOil gas dismissed

INTEROIL has brushed aside doubts over the quantity of gas reserves at its Elk/Antelope field in Gulf province.
The Sydney Morning Herald reported yesterday that the Canadian oil company was facing a wave of scepticism over its plans to export liquefied natural gas (LNG) from Papua New Guinea.
The newspaper quoted Australian industry insiders and analysts who were doubtful whether InterOil had sufficient gas reserves, claiming that the InterOil-led group had no certified reserves but it had detected gas flow rates at the Elk/Antelope field that InterOil had said were the strongest recorded in PNG.
It reported that InterOil aimed to build a second LNG plant in PNG alongside ExxonMobil’s US$12.5 billion (K36 billion) venture with Oil Search.
The analysts also said InterOil had “lofty” ambitions to build a similar sized plant to export eight million tonnes of gas a year through two production units, or trains, for just US$6 billion. The company aims to sell its first shipment by 2014.
Responding to the claims, an InterOil spokesperson told The National yesterday: “There is no wave of skepticism. The Exxon-led PNG LNG project is now a US$15 billion (K40 billion) project. InterOil does not intend to build alongside Exxon. InterOil intends to build on Government-owned land on which it has a 99-year lease alongside its 100% owned oil refinery, where it has a jetty system and harbour rights to the only deep water protected port on the coastline.
“We have certified resources that can not be called proven reserves until we reach final investment decision (FID). Industry insiders and analysts understand this, it is the same for all companies,” the spokesperson said.
The Herald had reported that InterOil, in the highest-case scenario from an independent evaluator, hoped to find reserves of 4.73 trillion cubic feet (tcf), but that this looked marginal for one train, let alone two.
The InterOil spokesperson disputed this: “Our most up-to-date resource estimate, which includes the results from Antelope-1, is 6.1tcf of gas and 100 MMbbls of condensate (or 6.7 tcf) plenty enough for one train by any standard and well on the way for a two train project.”
In response to claims that the market was edgy as the geology around InterOil’s oil and gas assets was different from the area where ExxonMobil and partner Oil Search were planning their LNG plant, the spokesperson said: “The market is not edgy at all! InterOil shares have been one of the best performing stocks on the New York Stock Exchange in 2009.
“Morgan Stanley recently recommended the shares as a buy. Our reservoir is manifold better that the higher cost and lower productivity wells being drilled in the Highlands.”