As Papua New Guinea’s largest resources project edges closer to completion, Business Advantage PNG speaks exclusively with Peter Graham, the man who has led the PNG LNG gas project since Day One. In this first part of a two-part interview, the Managing Director of ExxonMobil PNG provides an update on the project’s progress.

The PNG LNG project’s gas conditioning plant at Hides in Southern Highlands Province. Credit: ExxonMobil/Richard Dellman

Business Advantage PNG: At what stage does the PNG LNG project find itself, at the start of 2014?

Peter Graham: Different aspects of the project are more advanced than others, but the project overall is more than 95% complete.

ExxonMobil PNG’s Peter Graham

Starting from the Highlands area and working down: the drilling is going exceptionally well. Two wells are being drilled on each of four well pads. So far, we have successfully completed five of eight planned production wells at Hides.

The Komo Airfield in the Highlands was finished in April 2013, and then 88 loads were delivered by Antonov aircraft—loads that were too large or too sensitive to transport along the Highlands Highway. Then all of that equipment was shifted directly to the Hides Gas Conditioning Plant and installed.

That was a fantastic achievement—to get the airfield finished and then move the equipment that final 20 kilometres by road to its final resting place at Hides.

‘ The finish line is very clear at this point in time. Now, it’s a matter of being sure that all of the components of the Project come together for a safe start-up.’

Coming down the pipeline from the Highlands: construction of the pipeline is also doing very, well. There are two pipelines, in fact, between Kutubu and Hides—one’s for the liquid condensate and one’s for the gas. Construction is progressing from south to north. For the smaller of the two pipelines—the eight-inch pipeline for the condensate—welding is complete. Meanwhile, the 32-inch pipeline that will convey the gas, is also nearing completion and we’re progressively testing the line.

BAPNG: It will all be below ground?

Peter Graham: The pipeline will be buried. Construction has been particularly challenging as the pipeline runs right along the top of ridges, up some very steep terrain and then back down into the valleys. The contractor has done an outstanding job in getting through very difficult conditions.

The offshore pipeline was completed earlier in 2013.

Finally, the LNG plant located close to Port Moresby is also doing very, very well. Last year, gas started moving from Kutubu down the pipeline south to the LNG plant—not to produce LNG yet, but to commission various components of the LNG plant. So now, if you fly over the plant at night, the site is lit up.

Train 1 of the massive PNG LNG gas plant, 20km north-west of Port Moresby. Credit: ExxonMobil

Power is being generated on site, and we’re progressively commissioning the various components on Train One of the LNG plant, then we’ll progress across to Train Two.

Gas is also now also moving from Kutubu north to start the commissioning of the Hides Gas Conditioning Plant. When that’s complete, we’ll start flowing gas from the Hides wells to the Hides Gas Conditioning Plant and down to the LNG Plant to start the production of LNG. Liquids separated at the Hides Gas Conditioning Plant will also flow south to the Oil Search-operated Kutubu Central Processing Facility where they will be blended with oil and exported through the existing, upgraded oil export system.

The first cargo of LNG will be in the third quarter of this year, and we’re confident of meeting that schedule. At steady-state production, we need the equivalent of six ships in total to ship the cargoes.

BAPNG: You must be very excited at this stage.

Peter Graham: Everyone is. The finish line is very clear at this point in time. Now, it’s a matter of being sure that all of the components of the Project come together for a safe start-up.

The operations and maintenance team are now onsite at both plants, ‘walking down’ the procedures and getting ready progressively to take control of the facilities. At the LNG Plant, they have already taken care, custody and control of the utilities area, so they now manage the power supply and the water and other utilities, and will progressively take over the entire facility.

The transition from construction to operations involves a major effort on training, including competency assessments to validate that the operations team is ready for start-up.

In Part Two

Peter Graham considers the PNG LNG project’s flow-on benefits and ExxonMobil’s future in PNG. Plus, what will happen to the 14,700 workers currently working on the project? Read on …