Today I would like to focus my remarks on the three key areas:
FIRST is 2017 – which has seen our operations continue to perform at exceptional levels of reliability. We have had another great year thanks to the collective support and hard work of our workforce, co-venturers, suppliers, landowners and government.
SECOND is a look into 2018 and beyond and opportunities for growth for ExxonMobil in PNG.
AND FINALLY, a wrap up of what made PNG LNG a success and why it will be important for our future.
Our achievements in 2017 have been significant, from our safety performance and community support programs to our LNG production and acquisition and exploration activity. All of which have contributed to another successful year for ExxonMobil PNG.
Outstanding safety and environment performance
Our most important achievement is our continued outstanding safety performance. It is our commitment and focus on safety that allows each and every ExxonMobil PNG team member to go home to their families safely each day – In my view, there really is no greater achievement.
At the LNG Plant, this year we achieved over 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.
Another 2017 highlight has been our biodiversity strategy and monitoring programs which are showing continued improvement year on year as regeneration targets are met. Our dedication to understanding and preserving the environment is setting new environmental benchmarks for future developments in PNG.
World class performance
In the three and a half years since the safe start-up of PNG LNG, the Foundation Project has continued to operate as a model of excellence. PNG LNG is world class in terms of performance and reliability. We had industry-leading reliability in 2017 with less than 2% unscheduled down time.
Just last month, we achieved our best single day of production, reaching a production rate equivalent to 8.96 million tonnes of LNG a year.
We are on track to produce a total of 8.2 million tonnes of LNG this year which is about 20 percent beyond what we first thought the plant could achieve when the facilities were designed.
Largest ever maintenance program
This year we successfully completed the largest scheduled major maintenance program at the LNG Plant since start-up.
Anyone who has been involved in one of these major events knows the detailed planning that this involves across multiple workgroups and hundreds of people involved in execution.
I am very proud to say our primarily Papua New Guinean workforce performed to the highest of standards during this time. Front and centre were our Papua New Guinean maintenance technicians who successfully completed some very complex activities, including replacing the engines in the 10 house-sized turbines that power 30-megawatt compressors used to cool and liquefy the natural gas that is piped into tanks before being shipped offshore.
It was a first for an ExxonMobil facility anywhere in the world to tackle this maintenance in our local workshops; typically the engines are shipped offshore to the manufacturer’s facility overseas.
Pictured is one of our maintenance technicians Michelle working on one of the engines.
Michelle started working for PNG LNG in 2015, as part of our third intake of operations and maintenance trainees. She progressed to a maintenance specialist in 2016 after successfully completing her year-long traineeship.
As you can see, our technicians are receiving unprecedented exposure to complex maintenance activities very early in their careers – and they are knocking these opportunities out of the park.
Thanks to the strength and capabilities of Michelle and her many teammates at the LNG plant, we were able to complete over 45,000 work hours on maintenance activities without a single first aid incident. A huge achievement for all those involved.
We have continued to produce gas volumes reliably and consistently in 2017. By the end of December we expect to have sold 110 LNG cargos to customers this year across the Asia Pacific. By year end this will take us to more than 370 cargos sold since production first began in 2014.
With no late deliveries, it is clear PNG LNG has a reputation of reliability and quality.
Following a recertification of the PNG LNG project fields earlier this year, we are also out in the Asian market place now with an additional 1.3MTA sale opportunity and we are seeing significant interest thanks to our reputation.
Reliably powering Port Moresby
2017 represented the highest level of electricity sales since start-up with approximately 20 percent of the power demand in Port Moresby being reliably supplied by PNG LNG gas. To date, we have delivered over 480,000 megawatt hours of electricity from gas-fired generators inside the LNG Plant to the grid in Port Moresby.
We recently agreed terms to supply domestic natural gas for a new 58-megawatt power plant near Port Moresby to be built and operated by an independent joint venture between affiliates of Kumul Petroleum Holdings Limited and Oil Search Limited.
Upon completion of the power station, this will result in PNG LNG gas supplying approximately 40 percent of additional demand for Port Moresby.
We continue to support other power project opportunities and have gas reserved for those, including in the Hides area.
We support the governments’ objectives for increased electricity generation capacity recognising it is one of the greatest multiplier effects for economic development.
Best ever national content progress
Building operational and intellectual capacity in Papua New Guinea remains one of our top priorities. In 2017 we have continued to build on the development of our workforce achieving a record in skills and percentage participation.
Our workforce remains steady at around 2,500 people. 82 percent are Papua New Guinean citizens and 22 percent are women. This is a record for our Papua New Guinean workforce which is – in my opinion – outstanding. Our efforts to build a strong national workforce has continued to progress in 2017 through investment in training and development. Over time we are confident those numbers will grow even higher.
This year, we also saw our first Papua New Guinean operations technicians move into supervisory positions both at the Hides Gas Conditioning Plant and LNG Plant.
As I mentioned earlier, our Papua New Guinean Operations and Maintenance trainees are continuing expand their skills and knowledge through formal training and hands-on experience.
We now have more than 200 trainees at various stages of their development. Impressively over 50 are women – it’s very pleasing to see at this stage of our operation and we hope that over time, through their involvement, more young girls are starting to think about the opportunities that are available to them in the gas industry in this country.
The opening of the Kumul Petroleum Academy and the South Pacific Training Institute in the last 2 years means that our new 2017 trainees are now receiving part of their complex technical training from a Papua New Guinean provider. Trainees in previous years had to go overseas. We look forward to seeing the first trainees from the Kumul Academy graduate and join our operations in 2018.
Participation from local suppliers
PNG LNG is committed to procuring goods and services for production activities from local suppliers where ever possible.
The contribution PNG businesses have made to PNG LNG’s success in 2017 is considerable, and grows year on year as the skills and capacity of local companies increase.
2017 was a year of record participation from local businesses with – with nine landowner companies and some 150 non-lanco businesses providing services ranging from labour hire, maintenance, transportation, fuel distribution, container freighting, vegetable supplies, security, freight and logistics, maintenance services and customs clearance.
One of the most significant ways that we have helped landowner companies, as well as other local businesses to increase their opportunity to participate in our business is through training.
Total Waste Management is a fantastic example of a local supplier that we have worked with to build their capacity as a business.
This supplier operates a range of potable and wastewater treatment plants across the PNG LNG facilities and has worked with us for a number of years.
After witnessing the ongoing education and training opportunities offered to ExxonMobil staff, the management at Total Waste Management recognised that their operators, though rich in experience, were in need of formal training and qualifications that would help them realise their potential.
With the support of ExxonMobil PNG the company engaged a registered training organisation to provide their plant operators with formal training and qualifications in water operations.
As a result of this capacity build, Total Waste Management has since been involved on a number of major maintenance projects on the PNG LNG project which involved working at heights, confined space and inert entry and breaking containment activities.
We hold training and development in the highest regard and I believe that this story shows just how powerful leading by example can be.
Our continued support for the PNG Institute of Banking and Business Management Enterprise Centre also continues to provide training opportunities for a large range of local businesses.
The Enterprise Centre has been instrumental in helping Papua New Guinean businesses and landowner companies build long-term sustainable businesses supporting PNG LNG and we are confident as their services extend further across all business sectors their influence will continue to see increased growth in Papua New Guinean businesses and entrepreneurs in the years ahead.
Contributing to community development
The benefits we provide extend beyond those that are directly tied to our operations. In our local communities, we have invested more than 820 million kina to build infrastructure, develop social programs, and enhance skills and knowledge to improve the quality of life for the people of Papua New Guinea.
We have continued to build on our already significant programs in the key areas of education, health and environment, women’s economic empowerment and agriculture.
Our approach has always been to build partnerships with community organisations to deliver outcomes that meet the community’s needs for the long term - a hand up approach versus a hand out.
We are deeply committed to improving the learning opportunities for children in our project areas so improved access to education is a key priority. In 2017 we continued to build on our scholarships programs with respected education providers.
This year we added 13 scholarships for heath training in project areas on top of others awarded in 2015/16. We are contributing significantly to improvements to school infrastructure, training and housing support for teachers, and governance training for school boards of management.
In health we have significantly contributed to improved data collection and health diagnostics in PNG LNG project areas through our partnership with the PNG Institute of Medical Research. We are continuing to partner with NGO’s and others to broaden awareness on important health issues, and at a local level, we are providing training for health care workers and making infrastructure improvements to community clinics.
ExxonMobil PNG’s Dr Valentine Kolant will also be speaking tomorrow about some of our workforce health initiatives. Improved health education in our workforce also translates to better health outcomes for their families, friends and communities.
In 2017, we saw the positive effects of our livelihoods support program in and around Hides with villages supplying local produce to Hides Alliance Group for camp catering at our Hides Gas Conditioning Plant.
This has resulted in around 30 tonnes of vegetables being purchased directly from local communities with further potential for expansion as the supply chain improves. It is also effecting social change in some areas with the benefits of additional income being recognized by both the women and men in households.
PNG LNG is also investing 150 million kina in improvements to two sections of the Highlands Highway in PNG LNG project areas. This work started this year and will continue through until 2019. The work is being managed by the Department of Works, and we expect it will provide hundreds of job opportunities in the local communities for its duration.
A significant milestone in 2017 was the completion of ExxonMobil’s acquisition of InterOil.
Our investment indicates 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.
Record exploration activity
In 2017 we made a new gas discovery at the Muruk prospect, close to the Hides field. A second well will be drilled next year to delineate this find. If commerciality is confirmed, Muruk will provide additional gas resources for the PNG LNG Project.
With acreage across the Western Highlands, the Eastern Fold belt and offshore in the Gulf of Papua, Papua New Guinea represents one of ExxonMobil's most significant exploration focus areas in the world.
Recently we initiated one of the largest onshore seismic programs in PNG’s history with 2D seismic capture across a number of licenses in the Eastern Fold belt region.
We also continued to analyse existing data on three offshore licenses in the Gulf of Papua, which we were awarded in 2016.
Best ever performance by Kumuls and Hunters
We are also helping to build the nation in other ways. Investing in sports is a means of creating national pride and unity. Our sponsorship of the PNG Kumuls and Hunters has helped them to achieve their most successful year in 2017 in the Rugby League World Cup and the Queensland Intrust Super Cup. I don’t need to tell anyone here how successful the teams have been, or the excitement they have generated in PNG in the last few months.
What many people don’t often get to see is the work the players do as role models in the community. The enthusiasm we saw in local youth to dedicate themselves to training and leading healthier lives in order to one day emulate their sporting leaders was exceptional. The team’s performances on and off the field has been a source of great pride to PNG LNG.
2018 and beyond: growth opportunities
Through our high performing, reliable operations and our ongoing commitment to invest in Papua New Guinea and its citizens, we are making a significant contribution across the country.
Our continued determination to unlock PNG’s natural resource wealth means we’re also building on the solid foundation of the current project.
So let’s move on to 2018 and our future growth opportunities.
In addition to significant progress made on our Angore pipeline project in 2017, we expect activity to ramp up further in 2018.
This is a 1 billion kina investment to tie the Angore field into the production system at Hides. The Angore field lies to the east of our Hides facilities and in order to produce the gas from that field we are building a new 11-kilometre pipeline and installing production equipment at the Angore Wellpad.
The greenfields and brownfields pipeline right of way has been largely prepared in 2017. Large equipment continues to be flown into Komo, and pipe strings and materials transported along the Highlands Highway. We expect the significant trenching and pipe laying to commence in 2018, with completion of the project expected in 2019.
We are continuing to make progress on the P’nyang field development.
Drilling on an additional well has commenced with our joint venture partner Oil Search spudding the P’nyang South-2 well on October 22 this year.
The information gathered from the well and the certification of the reserves will provide valuable input to define the development concept and work with the government in relation to licenses next year.
We are hopeful of receiving some preliminary results from this well in early 2018.
In 2018 we will continue to work with Total, as operator of Papua LNG, to support them in the development of the Elk-Antelope fields.
As I have said previously, we believe our involvement in the Papua LNG project will complement Total’s efforts as operator and take advantage of synergies with PNG LNG to realise time and cost reductions that will benefit the government, co-venturers, landowners and communities. I will leave Philippe to provide more detail in his remarks shortly.
LNG plant expansion
As you can see, we have many opportunities we are pursuing for growth. Key to developing these opportunities is expansion of the LNG plant. We are progressing integrated engineering studies to determine most optimized expansion development. These studies will be completed in early 2018 and are critical to moving into front end engineering and design.
Our significant commitment to exploration also continues next year. As mentioned earlier, drilling at the Muruk field this year led to a natural gas discovery located near the Hides field. In 2018 we are planning to drill a second well to further define that resource.
The large Eastern Fold belt seismic program is expected to continue into 2018 at which time the large task of analyzing the data will begin.
In our deepwater offshore licenses in the Gulf of Papua we are planning to shoot 3D seismic in 2018 which will allow us to also further evaluate potential opportunities in those resources.
Our exploration manager Andy Elliott will speak in more detail about our exploration activities tomorrow.
Key to our future success
The ‘prize’ for capturing these growth opportunities is significant for Papua New Guinea.
The consistently high year on year performance of the PNG LNG Foundation Project is a distinctive model for reliable LNG operations in the Asia Pacific region and around the world.
The project should particularly be recognised for the benefits it has brought and the positive impact it is having on the lives of many thousands of Papua New Guineans.
New investment which builds on an already outstanding foundation will help increase jobs for Papua New Guineans, improve local business opportunities, expand community development and contribute to increased government revenues… but there is still a lot of work to be done and timing of investments are critical to ensuring the benefits are realised.
So what is the key to unlocking this potential?
Unlocking the opportunity for growth
The answer is working together with a shared vision for the development of the country. Forging and maintaining strong, mutually-beneficial partnerships is just as critical today as it was prior to the sanctioning of the PNG LNG project.
I encourage everyone to reflect that to make a difference it takes teamwork and partnership. We all need to work together toward a single focused goal, which is to improve the standard of living and create lasting opportunities in PNG.
I hope I have given you a sense of how deeply committed we are to this great country.
We have a big job ahead of us to capture the next round of opportunities. With the support of all our partners and stakeholders we are confident we can achieve our shared vision for the future.