Tag Archives: ExxonMobil

Shakes and superstition: Exxon faces backlash in Papua New Guinea

FILE PHOTO: The ExxonMobil Hides Gas Conditioning Plant process area is seen in Papua New Guinea in this handout photo dated March 1, 2018. ExxonMobil/Handout via REUTERS/File Phot

By Jonathan Barrett and Henning Gloystein

SYDNEY/SINGAPORE (Reuters) – A deadly earthquake that struck ExxonMobil’s $19 billion gas project in the mountains of Papua New Guinea is sparking a backlash against the U.S. energy giant that could prove harder to fix than buried roads and broken pipes.

Some spooked locals blame Exxon <XOM.N> and its project partners of causing, or at least magnifying, the 7.5 magnitude quake on Feb. 26 and a series of intense aftershocks that continue to pound the impoverished and isolated region.

While firmly denied by Exxon and debunked by geologists, the accusations suggest that the project known as PNG LNG, one of the most successful liquefied natural gas (LNG) developments in the world, is sorely lacking goodwill from at least parts of the local population.

The concerns about the project – the country’s biggest revenue earner – are even being expressed at senior levels in the Papua New Guinea government.

PNG’s Vice Minister for Petroleum and Energy, Manasseh Makiba, told Reuters in a phone interview there should be an inquiry to respond to local concerns that mother nature had reacted after the ground was disturbed by drilling.

Graphic on Papua New Guinea’s earthquakes and aftershocks: http://reut.rs/2tq3zY6

“It could be man-made but that cannot be confirmed until a proper scientific inquiry can be done,” said Makiba, who represents parts of the quake-hit area. “We need to resolve that.”

PNG’s Minister for Finance James Marape has also demanded answers from the company.

“In a world of science and knowledge, I now demand answer(s) from Exxon and my own government as to the cause of this unusual trend in my Hela,” wrote Marape on his private feed on Facebook, referring to the quake-struck province.

He is among many who have lit up social media in PNG, with blogs and Facebook posts pointing the finger at the oil and gas sector’s alleged contribution to the disaster.

Around Exxon’s operation, communities remain fearful as the death toll climbs, with 18 more killed by a 6.7 magnitude aftershock on Wednesday.

Papua New Guinea straddles the geologically active Pacific Ring of Fire.

Chris McKee, acting director of the Geohazards Management Division in Port Moresby, said there was no link between the project and seismic activity, which has included more than 120 quakes of magnitude 4.5 and greater in the week after the initial hit.

Graphic on Papua New Guinea government revenue and LNG income – http://reut.rs/2D3KAlP

“Earthquake activity has been going on much longer than the oil and gas industry presence in the region – there is no connection at all,” McKee said.

Scientific evidence strongly suggests the earthquake was “naturally occurring and consistent with prior events”, an Exxon spokeswoman said in a statement.

CORPORATE SUPPORT

Led by Exxon, with a one-third stake, and its Australian partners Oil Search <OSH.AX> and Santos <STO.AX>, PNG LNG could be shut for months as it inspects pipelines, the processing plant and the gas field for damage.

Exxon said it was giving $1 million to assist communities affected by the earthquake and was providing on-the-ground support to relief agencies so that resources could reach areas in greatest need.

“Logistics remains a challenge with roads cut and communication with remote communities difficult,” a company spokeswoman said. “We are continuing to provide logistics and human resources to help aid agencies to deliver support to our communities for the long term as they recover from this event.”

Oil Search Managing Director Peter Botten said he had not witnessed any local animosity toward the LNG project. Oil Search was constantly balancing the need for relief aid and keeping the community-sustaining business going when allocating post-quake resources, he said.

Graphic on share price performance of oil majors – http://reut.rs/2FeHCRw

“There’s a lot of concern the gods have been offended and specifically this is about education, and what earthquakes are about,” Botten told Reuters in a phone interview from PNG’s capital Port Moresby. “This is a communication issue.”

Most of the nations 8 million inhabitants live in remote communities where traditional beliefs remain strongly held.

SHAKY GROUND

Exxon has previously faced resentment in PNG, which contains vast natural resources but remains desperately poor.

Martyn Namorong, national coordinator for landowner rights and governance lobby group PNG Resource Governance Coalition, said the quake had reawakened concerns raised in 2012 when a landslide tore through a quarry used by Exxon, killing at least 25 people.

“It’s not just a localized thing or an ignorant thing. People are wondering what might be the contributing factor of oil and gas extraction,” said Namorong, referring to the quake.

Exxon said at the time it had closed the Tumbi quarry five months before the landslide.

“Tumbi was a tragic event that had its own unique set of circumstances,” Exxon told Reuters in an email, without elaborating.

Concerns flared again last year when the oil major had to evacuate staff due to unrest in Hela province, where the project’s Hides Gas processing unit is located.

The trouble was linked to national elections and disputes over royalties from the PNG LNG project, which generates around $3 billion in sales per year at current LNG prices.

“PEOPLE ARE TERRIFIED”

The earthquake forced a closure of the Hides Gas processing facility which feeds a 700-km (435 miles) pipeline snaking through the jungle to the LNG plant and export terminal near Port Moresby.

The disruption in Papua New Guinea comes shortly after Exxon reported disappointing results, with PNG LNG a rare bright spot. Its shares have underperformed compared with its main competitors Royal Dutch Shell, Chevron, BP  and Total.

“PNG LNG had reportedly been running at a very healthy 20 percent above nameplate capacity… There will be some hit to the PNG industry,” said Readul Islam, research analyst at consultancy Rystad Energy.

If repairs take long, the quakes could even delay plans with France’s Total to double output to around 16 million tonnes per annum at an estimated cost of $13 billion.

The companies plan to add three new LNG units, or trains, with two underpinned by gas from the Elk-Antelope fields, run by Total, and one underpinned by existing fields and a new Exxon-run field.

Repairs have been complicated by landslides blocking roads and the closure of the Komo airfield, which is the main lifeline of the region to the outside world.

Oil Search’s Botten said, importantly, the integrity of the gas facilities had been maintained and there were no leaks.

Still, the aftershocks have kept the local population on edge.

“The people are terrified,” said Australian Sally Lloyd, from near the quake zone in Mount Hagen. “They think the world is coming to an end.”

(Reporting by Jonathan Barrett in SYDNEY and Henning Gloystein in SINGAPORE; additional reporting by Gary McWilliams in HOUSTON and Tom Westbrook in SYDNEY; Editing by Lincoln Feast)

At least 14 dead in Papua New Guinea quake; ExxonMobil shuts LNG plant

Locals surround a house that was covered by a landslide in the town of Mendi after an earthquake struck Papua New Guinea's Southern Highlands in this image taken February 27, 2018 obtained from social media. Francis Ambrose/via REUTERS

By Sonali Paul and Melanie Burton

MELBOURNE (Reuters) – Up to 14 people were killed in landslides and by collapsed buildings during a powerful earthquake in the remote Papua New Guinea highlands, police and a hospital worker said on Tuesday, with unconfirmed reports of up to 30 dead.

The 7.5 magnitude quake that rocked the region early on Monday also damaged mining and power infrastructure and led ExxonMobil Corp to shut its $19 billion liquefied natural gas (LNG) plant, the country’s biggest export earner.

Two buildings collapsed and along with a landslide killed 12 people in Mendi, the provincial capital of the Southern Highlands, said Julie Sakol, a nurse at Mendi General Hospital, where the bodies were brought to the morgue.

“People are afraid. The shaking is still continuing. There’s nowhere to go but people are just moving around,” she said.

Dozens of aftershocks rattled the area, including a 5.7 quake on Tuesday afternoon, the U.S. Geological Survey reported.

Police in Mendi said 14 people were killed in the initial quake, including three in Poroma, south of Mendi.

“They were killed by landslides destroying families sleeping in their houses,” said Naring Bongi, a police officer in Mendi.

Provincial Administrator William Bando said more than 30 people were believed to have been killed in the rugged region, about 560 km (350 miles) northwest of the capital, Port Moresby, the Papua New Guinea Post-Courier reported.

The PNG disaster management office said it was verifying the reports but it could take days to confirm a death toll.

With a lack of communications preventing a clear assessment of damage, aid agencies had not yet begun relief efforts, said Udaya Regmi, head of the International Red Cross in Papua New Guinea, in Port Moresby.

“The magnitude of the earthquake is quite huge, so there must be an impact … but we cannot say how many people are actually affected and what they need,” Regmi said.

Prime Minister Peter O’Neill said the defense force was on standby to assist “when the extent of damage has been confirmed.”

ocals stand next to a damaged house near a landslide in the town of Tari after an earthquake struck Papua New Guinea's Southern Highlands in this image taken February 27, 2018 obtained from social media. Francis Ambrose/via REUTERS

Locals stand next to a damaged house near a landslide in the town of Tari after an earthquake struck Papua New Guinea’s Southern Highlands in this image taken February 27, 2018 obtained from social media. Francis Ambrose/via REUTERS

“We know that there have been houses lost, roads cut by land slips and disruption to services,” he said in a statement.

ExxonMobil said communications with nearby communities remained down, hampering efforts to assess damage to its facilities that feed the PNG LNG plant.

“Communications continue to be one of the most significant challenges,” the company said in an emailed statement.

Its partner, Oil Search Ltd, said a review of all of its facilities and infrastructure would take at least a week, and an industry source told Reuters that the Exxon plant will likely be shut at least seven days.

Miners Barrick Gold Corp and Ok Tedi Mining also reported damage to infrastructure.

LNG SHUTDOWN

The PNG LNG project is considered one of the world’s best-performing LNG operations, having started exports in 2014 ahead of schedule, despite the challenge of drilling for gas and building a plant and pipeline in the remote jungle of PNG.

The liquefaction plant has also been producing at around 20 percent above its rated capacity of 6.9 million tonnes a year.

ExxonMobil said it shut the two LNG processing units, or trains, at its site on the coast near Port Moresby after earlier shutting its Hides gas conditioning plant and Hides production pads in Hela province in the highlands region.

Gas is processed at Hides and transported along a 700 km (435 miles) line that feeds the PNG LNG plant, whose main customers are in Japan, China and Taiwan.

Traders said the impact on the LNG market would depend on the duration of the shutdown, but noted that spot prices have recently fallen from more than $10 per million British thermal units (mmBtu) as North Asia is coming out of the period of heavy winter gas demand. [LNG/]

“The global LNG market is likely to respond immediately as the buyers need to seek alternative sources,” said Boseok Jin, a research analyst at HIS Markit.

INFRASTRUCTURE DAMAGE

Barrick said some activities at the Porgera gold mine have been suspended to save electricity as the power station that supplies the mine had been damaged.

The mine is co-owned by Barrick and China’s Zijin Mining.

State-owned Ok Tedi said by email that a landslip had blocked a road and damaged pipelines to its copper and gold mine in the Star Mountains, adding that the road would take up to two days to be cleared.

Earthquakes are common in Papua New Guinea, which sits on the Pacific’s “Ring of Fire”, a hotspot for seismic activity due to friction between tectonic plates. Part of PNG’s northern coast was devastated in 1998 by a tsunami, generated by a 7.0 quake, which killed about 2,200 people.

(Reporting by Melanie Burton and Sonali Paul; Additional reporting by Tom Westbrook in SYDNEY, Charlotte Greenfield in WELLINGTON, Jessica Jaganathan and Oleg Vukmanovic in SINGAPORE, and Osamu Tsukimori in TOKYO; Editing by Richard Pullin, Tom Hogue, William Maclean)

Major quake cuts communications, halts oil and gas operations in Papua New Guinea

A supplied image shows a landslide and damage to a road located near the township of Tabubil after an earthquake that struck Papua New Guinea's Southern Highlands, February 26, 2018. Jerome Kay/Handout via REUTERS

By Charlotte Greenfield and Sonali Paul

WELLINGTON/MELBOURNE (Reuters) – At least one company began evacuating non-essential personnel after a powerful 7.5 magnitude earthquake hit Papua New Guinea’s energy-rich interior on Monday, causing landslides, damaging buildings and closing oil and gas operations.

The tremor hit in the rugged, heavily forested Southern Highlands about 560 km (350 miles) northwest of the capital, Port Moresby, at around 3.45 a.m. local time (1545 GMT Sunday), according to the U.S. Geological Survey (USGS).

A spokesman at Papua New Guinea’s National Disaster Center said by telephone the affected area was very remote and the agency could not properly assess damage until communication was re-established.

He said there were no confirmed casualties, although the International Red Cross (IRC) in Papua New Guinea said some reports indicated there were “fears of human casualties”.

“It’s a very serious all across the Southern Highlands and also all over the western highlands. People are definitely very frightened,” Udaya Regmi, the head of the IRC in Papua New Guinea, said by telephone from Port Moresby.

A supplied image shows a landslide and damage to a road located near the township of Tabubil after an earthquake that struck Papua New Guinea's Southern Highlands, February 26, 2018. Jerome Kay/Handout via REUTERS

A supplied image shows a landslide and damage to a road located near the township of Tabubil after an earthquake that struck Papua New Guinea’s Southern Highlands, February 26, 2018. Jerome Kay/Handout via REUTERS

The PNG government also said it had sent disaster assessment teams. At least 13 aftershocks with a magnitude of 5.0 or more rattled the area throughout the day, according to USGS data, but no tsunami warnings were issued.

“The Papua New Guinea Defense Force has also been mobilized to assist with the assessment and the delivery of assistance to affected people as well as the restoration of services and infrastructure,” Isaac Lupari, the chief secretary to the government, said in a statement.

ExxonMobil said it had shut its Hides gas conditioning plant and that it believed administration buildings, living quarters and a mess hall had been damaged. It also said it had suspended flights into the nearby Komo airfield until the runway could be surveyed.

“Due to the damage to the Hides camp quarters and continuing aftershocks, ExxonMobil PNG is putting plans in place to evacuate non-essential staff,” the company said in an emailed statement.

Gas is processed at Hides and transported along a 700 km (435 miles) line that feeds a liquefied natural gas plant near Port Moresby for shipping.

PAPUA PANIC

PNG oil and gas explorer Oil Search said in a statement it had also shut production in the quake-affected area.

The giant Grasberg copper mine operated by the Indonesian unit of Freeport McMoRan in neighboring Papua province was not affected, a Jakarta-based spokesman said.

However, the quake and several aftershocks caused panic in Jayapura, the capital of Indonesian Papua, Indonesia’s disaster mitigation agency said in a statement, but there were no reports of casualties or damage there.

The IRC’s Regmi said communications were “completely down” in Tari, one of the larger settlements near the quake’s epicenter, and that landslides had cut roads.

Several other aid and missionary agencies said poor communications in the area made damage and injury assessment difficult.

“The bush structures that they build tend to handle earthquakes extremely well,” Christian missionary Brandon Buser told Reuters after contacting several remote villages by shortwave radio.

Earthquakes are common in Papua New Guinea, which sits on the Pacific’s “Ring of Fire”, a hotspot for seismic activity due to friction between tectonic plates.

“This is the Papuan fold-and-thrust belt, so it’s a typical movement of faults in that region, but it’s big,” said Chris McKee, acting director of the Geohazards Management Division in Port Moresby.

Part of PNG’s northern coast was devastated in 1998 by a tsunami, generated by a 7.0 quake, which killed about 2,200 people.

(For a graphic on ‘Papua New Guinea’s 7.5 magnitude earthquake’ click http://tmsnrt.rs/2ow1YLR)

(Reporting by Charlotte Greenfield in WELLINGTON and Sonali Paul in MELBOURNE; Additional reporting by Fergus Jensen in JAKARTA and Tom Westbrook in SYDNEY; Writing by Jonathan Barrett; Editing by Paul Tait)