InterOil in Talks With Exxon on Natural Gas FieldsJoe Carroll
Exxon Mobil Corp., the world’s largest energy company by market value, entered exclusive talks to develop natural gas fields in Papua New Guinea discovered by InterOil Corp., operator of the only oil refinery in one of the world’s poorest nations.
Exxon may buy a stake in Petroleum Retention License 15, which comprises the Elk and Antelope fields, sending the gas to a $19 billion liquefaction complex it’s building on the country’s coast, Cairns, Australia-based InterOil said in a statement today. Exxon may expand the export facility, where gas will be cooled to a liquid so that it can be loaded on tankers, to handle output from the fields, according to the statement.
Exxon also would fund more drilling at the Elk and Antelope fields to assess the extent and size of the gas resource, according to the statement. Alan Jeffers, an Exxon spokesman, confirmed the negotiations and declined to provide additional details.
InterOil fell 7.6 percent to $86.40 at the close in New York. Earlier the shares surged to $106.44, the highest intraday price since 1997.
InterOil has been searching for international partners to help fund a Papua liquefied natural gas project since 2009, when Bank of America Corp.’s Merrill Lynch sold its 35 percent stake in the venture. Phil Mulacek, who founded the company in the 1990s when he disassembled an Alaskan oil refinery, refurbished it in Texas and shipped it to the South Pacific archipelago, retired as chief executive officer last month.
The company is searching for a new CEO. InterOil is incorporated in Canada’s Yukon, has offices in Cairns and Singapore, and is traded in New York.
The Elk and Antelope fields hold an estimated 9 trillion cubic feet of recoverable gas, InterOil said in its 2012 annual report. The company had spent $384 million on the fields through March 31.
Exxon is building a 430-mile (692-kilometer) pipeline to haul gas from Papua New Guinea’s highlands to a site near the capital Port Moresby where it’s building two liquefaction units. The Irving, Texas-based company already has discovered 9 trillion cubic feet of gas in the highlands to supply the LNG complex and is exploring for more.
In a March meeting with analysts in New York, Exxon Senior Vice President Mark Albers said the company may add as many as three additional processing units as more gas is discovered.
Papua New Guinea was ranked as the 122nd poorest nation in the world in the World Bank’s 2011 assessment of 193 countries, below countries such as Uganda and Albania.