Papua New Guinea: Drill for gas and the oil will flow, says expert
Post-Courier, June 1
PAPUA New Guinea has a few more oil fields the size of Gobe and Moran but they will be more expensive to find, according to a very senior exploration geologist. However, there is a lot of gas and getting that gas to the market will make it economical to find those small oil fields, says Carlos Aguilera, Chevron Niugini's former earth science manager.
In an interview with the Post-Courier before his departure from PNG, Mr Aguilera said Chevron has concluded that gas is the future for PNG after evaluating all the data they had. Mr Aguilera came to PNG in 1995 to evaluate whether Chevron would remain in PNG, whether it should sell out and leave, find the sizes of the oil fields and what their future was in PNG.
He said there was great confusion for Chevron then when managing director Larry Barthold and Chevron Overseas Petroleum president Richard Matzke asked him to evaluate the country's potential in oil and gas. Mr Aguilera's previous experience in evaluating the oil and gas potential in China and Russia was very helpful with his task in PNG.
''. . . (The) evaluation told us after looking at all the data that PNG has very few more oil fields to find and they are going to be small. They are going to be like Gobe - 100 million barrels, Kutubu is 300 million barrels but they'll be more expensive to find. ''But there is a lot of gas. The source rock - the material that creates the hydrocarbon instead of making oil makes six times more gas than it makes oil,'' Mr Aguilera said.
This message was conveyed to Mr Barthold and Mr Matzke and a decision was taken for Chevron Niugini to undertake an aggressive exploration program, resulting in the discoveries of the Moran and Gobe oil fields. Mr Aguilera said both these fields were now in production but because of their size, they were expected to decline, together with Kutubu.
''Gas is the future of PNG. If we are really going to get down to the bottom line, gas is the future because it will last for 50 years.''He said smaller companies will be encouraged to explore for both oil and gas if gas was exported to a market with smaller companies being able to tap into a common carrier pipeline in partnership with bigger companies.
''That then motivates the smaller companies. You need a big company to build the house, then everyone else will plug into it but if the foundation or the house isn't built, then that won't happen. ''The smaller companies cannot afford . . . they don't have the resources to do a $US3.8 billion dollar project but if we build the house, the smaller companies can explore in the Gulf, in the foreland etc. If they make a discovery, they can then plug into the pipeline,'' Mr Aguilera said.
''. . . Looking for oil in the Highlands, a typical well costs $US20 million, and so far, Moran is only 50 million barrels proven although we may be able to prove a little bit more. ''Looking just for oil, but a $US20 million well first time and we prove only 50 million barrels. ''In Angola, we drill a $US8 million dollar well and we prove 500 million barrels. In Angola, Nigeria and Venezuela, we drill a well that's one third the cost and we find 10 times more reserves.
''It is very expensive and very difficult to look for oil here but if we have the gas project, then everyone will start looking for gas and in the process, they will find more oil. ''(If) we don't have the gas project, what will happen is that the price of oil is so low, our last shipment we sold was $US14 per barrel. In 1997, we were selling at $US22 per barrel,'' he said.
Mr Aguilera said if no market is found for the gas, ''exploration will just slowly go flat, like a lot of mining exploration, and there'll be a lot of resources that we'll never find''. ''Gas project will motivate that exploration and in between all that, we'll find some more oil. The smaller oil fields will then be economic if we continue attractive fiscal terms, that's really important,'' he added.
By RUTH WARAM
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