OSH Oil Search Limited

Oil Search Ltd. (OSH.AU) expects early next year to have the first results from exploration drilling to find enough gas for an expansion of its US$15 billion gas-export joint venture with ExxonMobil Corp. (XOM), an Oil Search executive said Tuesday.

Phil Caldwell, Oil Search's executive general manager of liquefied natural gas, said the initial P'Nyang exploration well is due to begin drilling before the end of this year.

It is the first well in one of Oil Search's biggest-ever exploration programs in Papua New Guinea, much of it in partnership with Exxon, he said.

The program has "multi TCF (trillion cubic feet) potential for gas and several hundreds of millions of barrels of oil", Caldwell told an industry conference.

Initial results from P'Nyang, roughly 80 kilometres west of the Hides gas field, should be available in "early 2012", Caldwell told reporters on the conference sidelines.

First gas from the Exxon-led PNG LNG project is due in 2014.

Oil Search and Exxon are trying to find extra gas to justify construction of a third processing unit for the LNG plant.

The overall exploration program, expected to run through 2012 and into 2013, will include three gas wells in the PNG highlands, together with several appraisal/exploration wells in the Kutubu oil region, Caldwell said.

A well at the Hides project to test the lower extent of the existing gas resource could be drilled in the early part of 2012, he said.

"That is one of the critical wells because it is obviously right there next to the facilities and would be an obvious choice for an expansion," he said.

Meanwhile, Oil Search has longer-term plans to explore its untapped prospects in the Gulf of Papua.

Oil Search Chief Executive Peter Botten said last month that Royal Dutch Shell PLC (RDSB) is among a number of potential join venture partners for the offshore prospects.

 
   -By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243; sgbell@bigpond.com 
 

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