Cott Oil and Gas Ltd has undergone a restructure to allow the company to focus on  developing what could be Papua New Guinea’s first floating liquefied natural gas (FLNG) project – at the Pandora gas field in the Gulf of Papua. Cott’s Managing Director Andrew Dimsey outlines the company’s plans to Business Advantage PNG.

Perth-based Cott, which is a majority 40 per cent owner of Pandora (PRL 38), this week announced an agreement with Kina Petroleum Ltd and Heritage Oil Ltd to relinquish the 20 per cent interest it owns in PPL 437 in Western Province.

The company will not be required to meet any further financial contributions to advance the exploration program at PPL 437 as a result of the agreement.

Cott Oil & Gas Managing Director Andrew Dimsey

Cott’s Managing Director Andrew Dimsey told Business Advantage PNG that the company’s ‘main thrust’ is now the Pandora gas field and the PPL 437 agreement was ‘favourable’ for the company.

‘We believe Pandora has a potential development profile that fits within a small-scale floating LNG project and we’re probably now moving down that track of trying to pull together an FLNG project development at this particular gas field,’ said Dimsey.

‘We still think PPL 437 has potential but, after having a good look at it, we determined that PRL 38 is probably where we need to spend our hard-earned cash at the moment.’

Pandora potential

Pandora is located between Port Moresby and Daru in 120 metres of water at approximately 1,400 metres depth. Cott’s project partners include Talisman Energy Inc (25 per cent), Kina Petroleum (25 per cent) and Santos Ltd (10 per cent).

The project has a best estimate contingent resource of 800 billion cubic feet of gas, with previous licence holders suggesting it could host 1.3 trillion cubic feet of in-place gas.

‘If we manage to hit all the right buttons in a short period of time we think it could be up and running within three years’

Cott, with Talisman, launched an investigation into the prospect of a FLNG development at Pandora earlier this year by establishing a working group that included potential owner-operators, contractors and adjoining licensees.

Dimsey said the company was being consulted by potential developers of FLNG plants, including Belgian shipowner Exmar, on how a facility would be constructed for the Pandora gas field.

‘It is more likely the development would be a standalone, onsite FLNG development,’ Dimsey explained.

‘They are reviewing how they would go about building and honing the plant. We would just provide the gas and pay them a tolling fee for liquefying the gas—it’s a good business for them.

‘It would likely be a 10-to-15 year project at this stage and that is probably a function of reviewing development opportunities in the surrounding area. If it turned out to be a first class development it could even be a 20-year project.’

Next steps

Dimsey said Cott would continue to work with its project partners, including the PNG Government, to advance Pandora to a point where the joint venture could make a development decision.

He added the successful start-up of operations at the ExxonMobil-led PNG LNG project earlier this year had set a strong example of how LNG projects can be developed in the country.

‘Pandora is a small project in comparison [to PNG LNG] but if we manage to hit all the right buttons in a short period of time we think it could be up and running within three years,’ Dimsey concluded.

What is Floating LNG?

Although no floating liquefied natural gas plant is currently operational, several projects are being explored and developed, including Royal Dutch Shell’s first deployment of the technology at Prelude, off the Western Australian coast.

According to Shell, FLNG provides the following benefits:

• production, liquefaction, storage and transfer of LNG at sea
• the ability to process and export liquefied petroleum gas (LPG) and condensate at sea
• removes the need for pipelines to shore, dredging and onshore works, significantly limiting disturbance to the surrounding environment and reducing development costs.