Sydney (Platts)--12Oct2012/403 am EDT/803 GMT

Australia-listed Horizon Oil will begin planning for the development of its Elevala and Ketu gas and condensate fields in Papua New Guinea's Western province, including looking at the potential for LNG, after recent appraisal drilling resulted in a doubling of the certified resources in the permit area, the company said Friday.

The fields are located in Petroleum Retention Licence 21, where proven and probable contingent resources are now put at 795 Bcf gas, 40 million barrels of condensate and the equivalent of 26 million barrels of LPG contained in the gas. Horizon has also identified significant upside in the permit's Tingu prospect, which may be joined to Elevala field.

"This outcome, which represents a doubling of the certified resource size estimate before the drilling of the Elevala-2 and Ketu-2 appraisal wells, provides the incentive for detailed development planning," Horizon CEO Brent Emmett said in a statement.

"Firstly, we will be using the experience gained in the design of the Stanley field development in PRL 4 to fast track development plans and early production of the liquids in PRL 21 by way of gas stripping," Emmett said. "And secondly, the increased gas volume -- around 1.2 Tcf in PRLs 4 and 21 combined -- is approaching the scale required for a mid-scale LNG project and we are advanced in our prefeasibilty studies of this opportunity."

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Horizon's Stanley project, in its 50%-held PRL 4, was approved in January and is targeted for startup in late 2013. The $300 million development, involves the production of 140,000 Mcf/day of wet gas, from which initially 4,000 b/d of condensate will be recovered.

Horizon holds 45% of PRL 21, alongside partners Talisman Energy Niugini (32.5%), Kina Petroleum (15%) and Diamond Gas Niugini (7.5%).

Papua New Guinea is an emerging LNG province, with US major ExxonMobil currently constructing a 6.6 million mt/year project, scheduled to start up in 2014. A second project in the country is being pursued by US-based InterOil.

--Christine Forster, christine_forster@platts.com --Edited by Geetha Narayanasamy, geetha_narayanasamy@platts.com

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