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Speeches, 24 November 2015

PNG LNG update: PNG Chamber of Mines and Petroleum

PNG Chamber of Mines and Petroleum Conference, Andrew Barry, Managing Director, ExxonMobil PNG Limited

The Honorable Prime Minister, Peter O’Neill, the Honorable Ben Micah, Minister for State Enterprises, Byron Chan, Ministers, honoured guests, ladies and gentlemen.

Gutpla morning tru , Mi gat bikpla hamamas tru long kam stap long hia wantaim yupla olgeta long displa dei.

Today, you will hear two ExxonMobil perspectives. I will provide an update on the PNG LNG project, and later, Kim Bates, our Exploration Vice President for Asia-Pacific, will discuss global energy trends and how Papua New Guinea is well positioned in our global portfolio of opportunities. 

Together we will highlight our continued excitement about ExxonMobil’s current business in Papua New Guinea and our prospects for growth in the coming years.

Firstly… an update on where the PNG LNG project is at today. I can assure you that the Project team remains determined to show the world what Papua New Guinea is capable of. Some may ask how the early startup of the Project ahead of schedule last year could be bettered. That was an outstanding achievement, but what makes me equally excited, is the work that has continued since startup to build on our early success and consolidate PNG LNG’s reputation for being a reliable supplier of LNG to our customers across the Asia Pacific.  

ExxonMobil PNG and the PNG LNG Project have had another outstanding year in 2015.  

Since we last met at this conference in Sydney, there has been much to celebrate.  It was only 18 months ago that the PNG LNG project moved from construction to production, and we were celebrating the loading of the first cargo.  

In addition to celebrations in Papua New Guinea, key customers across Asia Pacific celebrated the arrival of their first cargoes, further highlighting the importance that Papua New Guinea will play in meeting their growing demand for energy.  

In January this year the first PNG LNG custom-built ship the Papua was officially named in China.  We were delighted to be joined by the First Lady Mrs Lynda Babao-O’Neill at the ceremony, where she officially became the Papua’s godmother.  A few short weeks later on February 22nd, the Papua arrived in Caution Bay and tied up at the PNG LNG marine loading facilities to load its first cargo.

In June this year just over one year after production began, we celebrated our 100th cargo.  To date, we have produced more than 10.3 million tonnes of LNG and loaded more than 140 cargos for delivery to customers across Asia Pacific. 

Since startup, we have been focused on safely increasing the efficiency of our operations and enhancing production rates at the Hides Gas Conditioning Plant and the LNG plant.   As a result our facilities are operating at high levels of efficiency and reliability above our expectations.  

This is a remarkable achievement by industry standards. And to achieve this after only 18 months of production further underpins our reputation for world class facilities and reliable operations in Papua New Guinea.  

We have been able to achieve this increase in production by systematically examining our operating data and optimising our process controls.  

The benefits of this increased production are wide ranging and include additional revenues for the Government of Papua New Guinea, landowners and provincial governments.  

In addition to optimising our production processes, in January this year we signed a Memorandum of Understanding with the Government that provides the supply of domestic gas to improve the capacity and reliability of Papua New Guinea’s power network, which will in turn facilitate the growth of businesses and improve the standard of living in the country.

The first phase of that commitment was to generate 25 megawatts of electricity. It was delivered in just five short months and demonstrated the power of the industry, government and community working together. Collectively we needed to build transformers, lay above ground and below ground power lines, and integrate them in time for the Pacific Games. And while it demonstrated our capabilities, credit is also due to PNG Power, whose tremendous efforts contributed to the overall success of the project.  Together, we’re helping to power Papua New Guinea. We’re proud of our contribution to this project which has resulted in the supply of more reliable and efficient power while also reducing emissions. We’re also proud that this work was completed without a single recordable injury.

Currently, we’re working towards the development of an additional 50 megawatt gas fired power station on a site near the LNG plant on behalf of PNG Power. This is in addition to the supply of natural gas for the purpose of power generation at Hides. 

We are very supportive of the government’s plans to improve the power generation capacity in the country which will serve as a catalyst for more business and economic growth.  And it is this economic growth that will help improve the standard of living for all Papua New Guineans.

The memorandum also recognises that the P’nyang field reserves will be needed to support the supply of domestic gas for power along with the potential expansion of the PNG LNG Project. We are working closely with the government on the Petroleum Development and associated pipeline licenses for the P’nyang field, that are required prior to our investment in the power project and future drilling.  We are confident of receiving the approval shortly and, together with Oil Search, drilling the next well in 2016. We are hopeful this will certify larger volumes of gas and together with further planned technical studies enable us to make an informed decision about how to proceed towards the Front End Engineering and Design phase.

This represents a further multi-billion dollar investment in PNG and the potential expansion of the PNG LNG Project, creating jobs and additional revenue for the nation.

Yet, the PNG LNG Project is more than just the physical assets that were built, or the revenues that flow to the State and our Project partners. 

We’re humbled to see the legacy that the PNG LNG Project continues to create for this nation.  The Project has and will continue to build intellectual and skills capacity of our people, and support the communities within which we work as a good corporate citizen.

Our production workforce consists of more than 2,600 people, with some 80 percent being citizens of Papua New Guinean.  Our team’s dedication and focus on safety and operational excellence, is truly outstanding.  On top of the more than 2 million hours of training delivered during construction, almost 24,000 hours of training has been delivered this year to further develop the skills of our production workforce.  

Our third intake of Operations and Maintenance trainees began training in April which together with previous intakes, makes a total of almost 200 young Papua New Guinean trainees - 25 percent of whom are women.  These are the people who will play a key role in running and managing our facilities into the future.  The enthusiasm, dedication and professionalism of our Papua New Guinean workforce is one of the most satisfying aspects of leading the team in Papua New Guinea.  They are truly the core of our current and future team.

Another achievement is our safety performance. Since July 2013 we have worked almost 56 million hours without a lost time incident – that’s an incredible 28,000 years for a single person not needing to take time off work as a result of an injury. This is an outstanding achievement for the team and, in particular, our Papua New Guinean workforce who, for some, put a hard hat and safety boots on for the first time in their careers when they started working with us.

I would be remiss without stressing how vital the landowners and project area communities have been to our success.  We continue to maintain the support of our neighbors and the wider community so that the benefits from the PNG LNG Project can be enjoyed by the people of Papua New Guinea.  

In our local communities we are continuing to build key programs focusing on education, health and environmental management, where we are helping thousands of PNG citizens lead better and healthier lives. 

Our support includes infrastructure and education initiatives in schools and local communities, building new classrooms and community centers and funding training sessions in topics such as book keeping, road safety and agriculture. 

To support World Environment Day earlier this year, over 100 of our staff were part of an army of 800 volunteers from schools, community groups and government agencies in clean-up, environmental awareness and tree planting activities in Hela and  Central Provinces and the NCD.  

We have partnered with the Texas Children’s Hospital and the Baylor College of Medicine helping to train almost 400 medicine and health science undergraduate students, as well as further development for more than 40 doctors and nurses at the Port Moresby General Hospital.

And last year we hosted the first-ever Global Women in Management program in Port Moresby, and I couldn’t be more pleased with how initiatives like this are helping empower women to make an important difference in their lives and communities.  In March, we also proudly supported the landmark Papua New Guinea Forum, which brought together many of this nation's female leaders and laid the groundwork for ongoing improvements to national policy affecting women.

We recognise the impact the current drought conditions are having right across the country.  We have been helping where we can across our site locations with multiple programs including supplying water to nearby community groups like schools, clinics and churches.  

As part of this effort we continue to help over 400 farmers across our project areas, providing them with technical advice and materials - including planting drought resistant crops - and monitoring activities in an effort to promote agricultural sustainability.  Through collaboration we are working together to help sustain their livelihoods and assist them to manage the impacts of the drought.   

We also looking at how we can provide assistance to a number of community organisations to help enhance their relief efforts.

Longer-term our community affairs staff have developed and are sharing educational materials around the effects of El Nino, coping strategies and safe-behaviors to help communities deal with the drought.

ExxonMobil is committed to PNG for the long term.  We are working hard to ensure that production operations maintain the highest level of performance and we continue to take full advantage of opportunities to grow our business in PNG.  

Before I hand over to Kim I would like to recognise the hard work and cooperation of the PNG Government, our co-venture partners, suppliers and contractors, landowners and communities in and around the areas in where we work, who continue to be with us every step of the way. It truly requires a team effort and commitment to deal with the challenges that arise.  We are proud of our collective success.  We welcome the opportunity to grow alongside the people of PNG and help provide long-term benefits for this country.  

With that I would like to now introduce Kim, who will discuss how our activities in Papua New Guinea fit into the wider exploration strategy for ExxonMobil.