Horizon awarded Stanley gas project licenses

Jun 02, 2014 12:00 AM

The Papua New Guinea government has formally awarded a production license (PDL 10) and pipeline license (PL 10) to Horizon Oil Ltd. for development of the Stanley gas project development in western PNG.

The grant of the licenses enables commencement of development activities including the drilling of the Stanley-3 and Stanley-5 development wells, site preparation, and facilities construction.

Stanley field is 40 km north of Kiunga in PNG’s Western Province. It will be developed by the joint venture comprising Horizon, Talisman Energy Inc., Osaka Gas Co. Ltd., and Mitsubishi Corp.

The development envisages production of about 140 MMcfd from two wells, the recovery and sale of about 4,000 b/d of condensate from that gas flow and sale of some dry gas as fuel for regional power generation.

Remaining dry gas not required for immediate sale will be re-injected into the reservoir for enhancement of condensate recovery and retention for future sales that may include a combination of further regional domestic gas use and a near-shore LNG project.

The grant of the Stanley licenses was also the final condition precedent for Horizon’s sale of 40% of its PNG petroleum interests to Osaka Gas. Under the terms of this agreement Horizon will receive its first payment of $78 million of the total $204 million sale price within 10 business days.

The completion of the Osaka Gas transaction, in turn, will satisfy a material condition precedent to Horizon’s proposed merger with Roc Oil Co. Ltd. by way of a scheme of arrangement that was announced at the end of April this year.

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