The recent earthquake has deeply shocked us all. On behalf of the ExxonMobil PNG family, I would like to express our sincere condolences to the families and friends of those who have lost loved ones in this tragic event. We have been so very fortunate that no one was significantly injured at our operations but tragically members of our family who were at home at the time will not be returning.
Whilst the PNG LNG facilities in the Highlands have been impacted and it will take us a little time to repair the damage, it cannot be compared to the effects this natural disaster has had on people and communities in the impacted areas.
Despite the challenges of the last few weeks, it is important that we continue to talk about the very exciting opportunities we have in Papua New Guinea. The country is well placed to capture a new round of investment opportunities to drive further growth. For me, the earthquake has reinforced the need for all stakeholders to continue to work together; harder, smarter and focused, to help Papua New Guinea re-establish itself as one of the most reliable suppliers of LNG in the world, and move future opportunities forward and to encourage new investment in this great country.
I have a deep respect for the resilience of all Papua New Guineans and I truly believe over time this country will emerge stronger than ever and we at ExxonMobil be there right by your side every step of the way.
Today I am going to focus on three things:
FIRST is 2017, which saw our operations continue to perform at exceptional levels of reliability. Last year was another great year thanks to the collective support and hard work of our workforce, co-venturers, suppliers, landowners, government and buyers.
SECOND is a look at 2018 and beyond and particularly the expansion opportunities for our business here.
FINALLY, and most importantly – I will spend some time on the impacts of the earthquake – including our operations and our support for the significant humanitarian relief effort that continues.
While I don’t have enough time to talk about all of the highlights in 2017, I would like to name a few.
Outstanding safety and environment performance
Our most important achievement is our continued outstanding safety performance. It is our commitment to, and focus on, safety that enables every member of the ExxonMobil PNG team to go home to their families safely each day.
At the LNG Plant, last year we achieved more than four years of operation without a lost time incident – that is around 10 million work hours where not a single person has needed to take time off from work as a result of an injury.
Secondly, our biodiversity strategy and monitoring programs showed continued improvement in 2017 as regeneration targets were met. The comprehensive biodiversity data our environmental scientists have collected, is going to be an important resource to help PNG understand some of the long term environmental impacts of the earthquake.
World class performance
Whilst a little bittersweet in the context of current events, PNG LNG has continued to operate as a model of excellence. Our operations are world class in terms of performance and reliability.
We have produced more than 27 million tonnes of LNG and delivered 374 LNG cargoes since production began.
More than 8.2 million tonnes of LNG was produced and 110 cargoes delivered during 2017 – this is about 20 percent beyond what we originally thought the plant could achieve when the facilities were designed.
We also recorded less than 2% unscheduled downtime.
In May of last year, the Hides Gas Conditioning Plant achieved a milestone with 1 trillion cubic feet of gas produced since operations began.
We achieved these milestones while also completing the largest scheduled major maintenance program at the LNG plant since start-up and completing some of the work “on site” for the first time ever around the world. Demonstrating the amazing capabilities of our ever growing Papua New Guinean workforce.
To our customers here, I would like to acknowledge your incredible support as we continue to work with you to manage the impacts of the earthquake on our business.
Reliably powering Port Moresby
In 2017 PNG LNG gas continued to reliably supply around 20 percent of Port Moresby’s domestic power demand. PNG LNG will also be providing gas to the new 58 megawatt power plant currently being built outside Port Moresby, which will add a further 40 percent of capacity to Port Moresby’s market.
We are also excited about working with our partners Kumul and MRDC on gas for more power plant capacity builds.
We continue to look at opportunities for other power project opportunities and have gas reserved for those, including in the Hides area.
World class workforce
Our efforts to build a strong Papua New Guinean workforce continued to progress in 2017 with more than 80,000 hours of training delivered. We have nearly 2600 employees and contractors with 82 percent being Papua New Guinean and 22 percent women. This is outstanding for such a young organisation.
We have continued to build on our already significant community programs in the key areas of education, health and environment, women’s economic empowerment and agriculture. Our partnerships particularly with community organisations in Hela and Southern Highlands, have been critical in helping us to understand the needs of our project area communities since the earthquake.
2018 and beyond
So let’s turn to 2018 and beyond. Our investment in the acquisition of InterOil last year demonstrates the great confidence ExxonMobil has in Papua New Guinea and the opportunity which exists to expand our business significantly and deliver additional benefits to this country.
In addition to the Elk Antelope interests, importantly, the InterOil acquisition also provided ExxonMobil with significant new exploration acreage.
With acreage across the Western Highlands, the Eastern Fold belt and offshore in the Gulf of Papua, PNG represents one of ExxonMobil's most significant focus areas in the world.
Exploring for more growth
Muruk is a recent new gas discovery close to the Hides field. If a planned second well this year confirms its commerciality Muruk will provide additional resources for the PNG LNG Project.
We have a large Eastern Fold belt seismic program which is continuing through this year.
We are also planning to shoot 3D seismic in 2019 in our deep water offshore licenses in the Gulf of Papua which will allow us to also further evaluate potential opportunities in those resources.
We are very encouraged by the results from the recent P’nyang South-2 well in Western Province. An independent recertification of reserves is currently underway and we expect it will lead to an increase in the certified P’nyang resource size.
P’nyang represents a further multi-billion dollar investment that extends gas pipeline infrastructure into Western Province creating jobs and revenue for the nation.
We look forward to working with the government to progress the development concept and secure the Petroleum Development and associated pipeline licenses for the field.
We are also continuing to work with Total, as operator of Papua LNG, to support them in the development of the Elk-Antelope fields.
The joint venture partners are making good progress on alignment on the development concept. Subject to partner approvals we expect to commence discussions with the government on the project gas agreement leading up to a decision on FEED later this year.
I will let Philippe talk more about this shortly.
LNG plant expansion
As you can see, we have many opportunities we are pursuing for growth. Key to developing these is expansion of the LNG plant.
In recent weeks we have presented our recommendation to the various joint venture interests for a three train expansion of the LNG Plant outside Port Moresby. The development concept totaling 8mta would double the capacity of the existing LNG plant.
The concept proposes two trains dedicated to processing gas associated with Papua LNG and one train for gas associated with P’nyang and other PNG LNG fields. ExxonMobil PNG would operate the LNG Plant expansion on behalf of the various joint ventures.
While there is still some work to be done we are continuing to work towards alignment across all parties on a coordinated and integrated expansion that maximizes the value for all stakeholders.
Dialogue has been encouraging and we hope to be in a position to discuss some near-term actions plans shortly.
We look forward to working with Total as the upstream operator of Papua LNG and the government of Papua New Guinea to continue to move these significant expansion opportunities forward.
You have all seen the images of damage in the Highlands from the recent earthquake. I am incredibly proud of the way everyone in ExxonMobil PNG has responded to this significant event.
We are very focussed on restoring production as quickly as possible; while importantly, helping support our project area communities to recover. Without the support of our communities PNG LNG would not be what it is today.
Let me speak about our operations first. Most importantly none of our employees and contractors were significantly injured as a result of the earthquake. Around 300 personnel were safely evacuated in the days immediately after. The safety and security of our people remains our highest priority while we work to restore production.
While assessments are still ongoing we believe it will take approximately eight weeks to repair the damage and to restore production.
The PNG LNG facilities withstood the magnitude 7.5 earthquake extremely well because of their world-class design and construction and the very professional response by our staff.
I cannot speak more highly of the way our people reacted in an extremely difficult situation. Their immediate actions to help safely shut down the plant helped to minimize damage to equipment and ensure there was no release of hydrocarbons.
We have established a Recovery Project Team to support the significant work effort.
It’s times like these that you truly appreciate the value of a global organisation with a depth of technical experience that you can tap into for assistance. Our local teams have been joined by technical experts from around ExxonMobil’s global operations to help us assess the damage and restore production as quickly as possible. Our co-venturers have also provided people to support us.
At the Hides Gas Conditioning Plant you see there has been some damage to various pieces of equipment and foundation supports that will need to be fully assessed and repaired. Initial visual inspections of the major processing equipment indicate that they have not been significantly impacted. To the left is an example of foundation damage - in this case to an emergency generator - and on the right, equipment damage to a compressor anti-surge valve.
Surveillance of the pipeline indicates it has not been damaged. It remains safely shut in and pipeline pressure has remained steady since shutdown. The wells are also safely shut in.
We are currently exploring options to repair and reopen a smaller section of the Komo runway that will allow us to resume flying staff and equipment into the airfield and importantly make it available to support ongoing humanitarian relief efforts. This is going to take some time.
The picture on the left shows the pipeline right of way from the top left of the photo to the bottom right. The middle and right photos show damage to the Komo airfield.
Supporting our communities
As I said earlier, the damage to our facilities cannot be compared to the challenges the earthquake has caused for our neighbouring communities, it really does put things into perspective. They have suffered significant damage to their homes, food gardens have been destroyed, clean drinking water has been impacted; and basic infrastructure like health clinics and schools are in need of repair or replacement. It is going to be a long road to recovery.
We were able to quickly facilitate a visit to the area by local and international relief agencies to help them rapidly assess priority needs.
We are continuing to work with the National Disaster Centre, relief agencies, the governments of PNG, Australia and New Zealand and our co-venturers Oil Search and MRDC, to coordinate ongoing distribution of aid to the most impacted areas.
It is by no means an easy task, the logistics required for such a large-scale relief effort are enormous. We recognised very early that it was going to take the combined talents and logistics of everyone working together as one team to get relief to where it was needed most. I would like to acknowledge Peter and the Oil Search team for the lead they have taken to help distribute the combined relief supplies from ExxonMobil and the many relief agencies and governments from their base at Moro. I would also like to acknowledge Augustine and MRDC who have been providing direct help but also important information to help understand the most impacted areas. Also Sir Moi and Wapu Chairman and MD of Kumul who along with Ok-Tedi have collectively committed more than 100M kina for recovery support; and our co-venturers Santos and JX Nippon for their support.
A US$1M donation (nearly K3.5 million) from Exxon Mobil Corporation is supporting the immediate humanitarian relief effort.
In addition, within ExxonMobil we have many people working with relief agencies; to source essential goods; transport and pack supplies like shelter, food and water; coordinate airlifts to Moro; deliver relief to communities and work with our considerable on-the-ground networks to help identify essential information to ensure aid agencies can target relief appropriately.
We are also looking ahead to how we can provide medium and longer term support to help get communities get back on their feet.
One of the longer term priorities is to get health facilities functioning again. In addition to delivering critical medical kits, we are helping with the assessments and providing logistics support to relief agencies as they work to re-establish these important facilities.
We are also looking to help quickly re-establish food gardens in a number of our project area communities.
The ANU Enterprise who have worked with us for a number of years on community livelihood improvement programs are planning to get back into the field shortly to help address this mid to longer term need by providing quick-growing corn seed that can be harvested within 100 days of planting and distributing seedlings for longer term staples like sweet potato and cassava. ANUE will also be providing tools like spades and axes for people to work their gardens once again.
Over time our goal is to reintroduce our vegetable markets, to buy surplus produce from the community to help feed our workforce at Hides and provide valuable income for local households.
We are also bringing forward and increasing funding to help the government tackle the significant task of restoring key roads in the Highlands. This recognises the longer term need to quickly re-establish trading routes so people can once again generate income to support their livelihoods. We have committed to increasing this funding to 75M kina in 2018
We know there is much more work to do in this space but we are here for the long term and will continue to work with our communities to help them recover from this significant event.
Unlocking the opportunity for growth
There is a big job ahead to help our friends and neighbours to recover from the recent earthquake, to restore PNG LNG production and capture the next round of expansion opportunities.
It has never been more critical to work together to unlock the potential for this country. We have seen the benefit of partnerships in recent days, working together as one, to make a difference. It’s that same spirit of partnership that is required to move the next round of developments forward, in a timeframe that is beneficial for all parties.
ExxonMobil PNG is deeply committed to this great country.
With the support of all our partners and stakeholders we are confident together we can achieve an even brighter future for Papua New Guinea.