Under the terms of the award, Oil Search has committed to spend approximately $5 million over two years on the evaluation of existing data within the seven licenses and the drilling and sampling of three shallow wells. The company then has the option to extend the licenses for an additional two years, subject to relinquishments and an additional committed work programme. Oil Search holds 100% equity in all seven licenses.

The licenses are located in the PNG Foreland, which is characterised by lowland forests and swamps, has few roads and a very sparse population. Existing well data in the area is limited, but suggests the presence of thick coal layers and a large coal basin in this area. The rank, gas content and producibility of the coals will be constrained by the proposed drilling programme. The wells required to drill these sequences are relatively shallow, with a total depth of less than 900 meters.

Drilling activities will utilize mobile mineral-type drilling rigs and are therefore significantly cheaper than those targeting deeper petroleum systems.

Exploration and production of CSG in Papua New Guinea is governed by the PNG Mining Act hence the licenses are administered by the Mineral Resources Authority.

Oil Search’s Managing Director, Peter Botten, commented: “CSG exploration and production has increased markedly in recent years in countries such as Australia, USA and Indonesia and CSG technology is developing rapidly. While substantial coal seams have been penetrated by previous petroleum wells in the Foreland area of PNG and estimated net coal thickness compares favourably to existing CSG projects globally, the potential for CSG in PNG has yet to be fully investigated. Based on our extensive in-country operational experience, augmented by specialist CSG expertise, Oil Search is in an excellent position to undertake this work. While at a very early grass-roots stage, we believe there is good potential for the presence of CSG in PNG which, over time, could represent another significant source of gas. Any successful discovery of CSG resources in PNG could be integrated with supply from nearby conventional gas fields, thereby reducing the risks for any development.