OBG talks to Michael Hession, CEO, InterOil

Interview: Michael Hession

How can the oil industry help contribute to the broader economic development of Papua New Guinea and the well-being of its citizens?

MICHAEL HESSION: One primary way is through jobs. Our company believes in local talent and is committed to developing it. Today, InterOil employs more than 1100 people in PNG, ranging from experts in drilling and logistics to community relations specialists. The overwhelming majority are locally hired, and their wages in turn support thousands of family members. Beyond that, integrated business activities in exploration, refining and distribution have not only fuelled the nation, but they have also produced millions of dollars in revenue for the government and enabled the people of PNG to benefit from their own natural resources, as they should.

What results have exploration activities shown so far in 2014, and what are the prospects for new drilling going forward?

HESSION: I am glad to say that we have started our exploration campaign, specifically drilling wells at the Raptor-1, Bobcat-1 and Wahoo-1 sites in the Gulf Province. We plan to drill up to four additional exploration and appraisal wells in cooperation with Total and Oil Search in the PRL 15 area, which contains the Elk-Antelope field – one of the largest gas discoveries in the Asia-Pacific in the past 20 years. In all, we are expecting to drill up to eight wells in this $300m drilling campaign, and I anticipate more over the next three years. The first results are expected within three months of the start of the campaign, and I can safely say that this is one of the largest drilling programs in PNG’s history.

Additionally, we have been given permits to look for oil and gas in 4m acres near the south coast of PNG, and it is our intention to explore this area to the fullest, as we see in it a large number of promising prospects and the start of a great journey for InterOil. We have been receiving countless offers for partnerships, including several major ones. Nevertheless, we feel confident in our capacity to exploit these resources, and do not see the need to farm out at this stage. There are few countries like PNG left on the planet that can boast such vast potential but that have not yet been fully licensed.

InterOil and Total will be cooperating for the development of the Elk-Antelope project. What is the significance of this partnership?

HESSION: Total will help bolster our seismic and drilling activities while holding a material interest in PRL 15, which presents huge opportunities for the country. The partnership could also clear the way for other joint ventures. For us, the introduction of Total to this project is a vote of confidence and a defining moment for our company’s operations in PNG.

Given InterOil’s extended history with PNG, how would you describe the long-term prospects for expanding activities in the country?

HESSION: This has been a landmark year for us. We have a new management team, a major partnership to develop a large gas field, and some significant, long-term exploration rights. A decision on PNG’s second liquefied natural gas (LNG) plant could be made within two and a half years and, if successful, shipping could begin by 2020. There is more to come. Helping PNG realise the benefits of all these developments will contribute significantly to the economy through jobs, taxes and royalties.

InterOil has been a partner to PNG for more than 17 years, through both recessions and good times, and we plan to be here for many years to come. The LNG project alone is expected to take 20-30 years to run its course. There are also a number of additional promising areas to explore, more wells to drill and we do expect to find more oil and gas. Our partnership with PNG is one that we are proud of, and the country’s future is one we are excited about.