Environmental Assessment Report Summary Environmental Impact Assessment Project Number: 39584 May 2006 Papua New Guinea: PNG Gas Project Prepared by [Author(s)] [Firm] [City, Country] Prepared by Esso Highlands Limited on behalf of the Government of PNG for the Asian Development Bank Prepared for [Executing Agency] [Implementing Agency] The summary environmental impact assessment is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s be preliminary in nature. members, Board of Directors, Management, or staff, and may be preliminary in nature. CURRENCY EQUIVALENTS (as of 5 May 2006) Currency Unit – kina (K) K1.00 = $0.33 $1.00 = K3.08 ABBREVIATIONS AusAID Australian Agency for International Development ADB – Asian Development Bank APC – AGL Petronas Corporation ASL – above sea level BTEX – benzene, toluene, ethylbenzene, and xylene CGCP – central gas conditioning plant CNG – compressed natural gas CO – carbon monoxide CO2 – carbon dioxide DEC – Department of Environment and Conservation DOW – Department of Works DPE – Department of Petroleum and Energy EIA – environmental impact assessment EIS – environmental impact statement EMP – environmental management plan EPA – Environmental Protection Agency FMA – forest management area GHG – greenhouse gas GPCSA – Gas Project Co-operative and Sharing Agreement H2S – Hydrogen Sulfide HIV/AIDS – Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome IAC – Independent advisory committee IAS – impact assessment study IUCN – World Conservation Union (International Union for the Conservation of Nature and Natural Resources) KICDP – Kikori Integrated Conservation and Development Program LLG – local-level government LNG – liquefied natural gas LPG – liquefied petroleum gas NECL – National Energy Company Limited NFA – National Forest Authority NGO – nongovernment organization NOx – nitrogen oxides NO2 – nitrogen dioxide NTU – Nephelometric Turbidity Unit PM10 – Particulate that are less than 10 micron in diameter PNG – Papua New Guinea ROW – right-of-way SEIA – Summary environmental impact assessment SHES – Safety, Health, Environment, and Security SIMMP – Social impact management and monitoring plan SO2 – sulfur dioxide SPPL – South Pacific Pipeline Company Pty Ltd TCEQ – Texas Commission on Environmental Quality TSPZ – Torres Strait Protected Zone TSS – total suspended sediments UNDP United Nations Development Programme VOC – volatile organic compound WHO – World Health Organization WMA – wildlife management area WWF – World Wide Fund for Nature WEIGHTS AND MEASURES dB(A) – A-weighted decibel (commonly used measurement for environmental and industrial noise) dbh – diameter at breast height g/m3 – grams per cubic meter kg – kilogram km2 – square kilometer kph – kilometer per hour µg/m3 microgram per cubic meter m3 – cubic meter m3/s – cubic meter per second mg/l – milligrams per liter mg/Nm3 – milligram per Normal cubic meter mg/Sm3 – milligram per Standard cubic meter (Sm3 - Volume of gas which occupies a volume of one (1) m³ under standard conditions (pressure = 1,01325 bar, temperature = 288.15 K (15°C)) Mscfd – thousand standard cubic feet per day Mt/year – megaton per year NOTE In this report, “$” refers to US dollars. CONTENTS I. INTRODUCTION 1 II. DESCRIPTION OF THE PROJECT 1 A. Objectives and Scope of the Project 1 B. Field Production and Processing Facilities 2 C. Onshore Pipelines and Construction Access Ways 3 D. Offshore Pipeline 9 E. Construction Support Bases and Ancillaries 9 F. Schedule 9 G. Implementation 9 III. DESCRIPTION OF THE ENVIRONMENT 11 A. Onshore Setting 11 B. Offshore Setting 22 C. Main Social, Economic, and Cultural Issues (Onshore and Offshore) 25 IV. ALTERNATIVES 26 A. Alternative Without Project 26 B. Alternative Products 27 C. Alternative Sales Gas Pipeline Route 27 D. Alternative Facilities Locations and Greenfield Pipeline Route 27 E. Alternative Project-Only and Public Access Roads 28 F. Spoil Management 28 V. ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 28 A. Environmental Impacts and Proposed Mitigation Measures (Onshore) 29 B. Environmental Impacts and Proposed Mitigation Measures (Offshore) 37 C. Waste Management 38 D. Social Impacts and Proposed Mitigation Measures (Onshore and Offshore) 39 E. Cumulative Impacts 41 F. Associated Impacts 44 VI. ECONOMIC ANALYSIS 47 VII. ENVIRONMENTAL MANAGEMENT PLAN 48 A. Environmental Management Framework 49 B. Environmental Monitoring Framework 49 C. Institutional Capacity and Arrangements 50 VIII. PUBLIC CONSULTATION AND DISCLOSURE 55 IX. CONCLUSIONS 56 APPENDIXES 1. Environmental Standards and Guidelines 57 2. Definitions of Spatial, Temporal, and Biodiversity Impact Terminology 65 3. Environmental Management Framework 67 4. Environmental Monitoring Framework 73 5. Consultation Summary 82 1 I. INTRODUCTION 1. The Papua New Guinea (PNG) Gas Project (the Project) will develop existing oil and gas production fields in the PNG Highlands to produce natural gas for export to Australia by pipeline (Figure 1). The Project is being developed through a joint venture between Esso Highlands Limited (as operator) and its affiliates, i.e. Oil Search Limited and its subsidiaries, Nippon Oil Exploration Limited (through its subsidiary Merlin Petroleum Company Limited), and subsidiaries of Mineral Resources Development Company Limited (the joint venture is referred to as the project proponent). The project gas fields are contained within existing petroleum development licenses or petroleum retention licenses. The participation of the Government of Papua New Guinea (the Government) in the Project is set out in the PNG Gas Agreement 1 ,executed in 2002. 2. The PNG Environment Act, 2000, requires that a project of this type and scale be approved by the minister for environment and conservation on the basis of an environmental impact statement (EIS) which is referred to in this report as the environmental impacts assessment (EIA) report. The Esso Highlands Limited submitted the EIA report and its supporting studies to the Department of Environment and Conservation (DEC) in December 2005.2 Approval in principle of the EIA is expected in May, 2006. 3. This summary environmental impact assessment (SEIA) summarizes the major findings of the EIA report and incorporates new information collected by the Project, the Government, and Asian Development Bank (ADB) missions. The new information (collected to meet ADB environmental assessment requirements), includes an environmental management plan (EMP) framework that will be further developed during project implementation, associated impacts, and a review of the Project’s compliance with the World Bank’s Pollution Prevention and Abatement Handbook (PPAH). In addition, a supplementary EIA on indirect impact assessment of roads will also be prepared (the study is scheduled from middle May to end of July, 2006). It will recommend environmental mitigation measures and a monitoring plan particularly for forests and the biodiversity in the Kikori river basin. II. DESCRIPTION OF THE PROJECT A. Objectives and Scope of the Project 4. The Project has two interdependent objectives: (i) commercialize the natural gas reserves of the existing Kutubu, Gobe, Agogo, and Moran oil fields; and the Hides gas field; and, in so doing, (ii) maximize oil recovery from existing oil and gas fields. The Project will produce 225 petajoules of sales gas per year over about 30 years and potentially beyond, with the first gas scheduled to be available for delivery to customers in Australia in 2009. The main elements of the Project are as follows: (i) wells, gathering system, and gas processing facilities at Hides and pipelines to Kutubu; (ii) a new central gas conditioning plant (CGCP) to be located near the existing Kutubu Central Production Facility; and (iii) a sales gas pipeline running through Gulf Province across the Gulf of Papua to the international border with Australia near Pearce Cay in Torres Strait.3 Project activities involve the development of 11 wells on Hides Ridge, construction of three pipelines (118 kilometers [km]) from the Hides Production Facility to the new CGCP at Kutubu, and construction of the sales gas pipeline running 192 km onshore from Kutubu to landfall and 273 km offshore to the PNG–Australia border. Under the GPCSA4, the Government will build new sections of road to complete an 1 The Gas Agreement sets out the terms and conditions necessary for developing, producing and marketing of natural gas resources in the Southern Highlands of PNG. 2 The EIS report and studies are available for public review at Esso’s Port Moresby, DEC’s Waigani offices, and the offices of the Gulf and Southern Highlands Provincial Administrators at Kerema and Mendi. 3 At the international border, the sales gas pipeline owner becomes AGL Petronas Consortium (APC), which will build the continuation of the pipeline to markets in Australia. 4 The Gas Project Cooperation and Sharing Agreement (GPCSA) is the agreement which will coordinate the payment of royalty and equity benefits to Gas Project area landowners in accordance with the respective area licence interests. 2 eastern link from Mendi and Mount Hagen to Kikori. In line with the Gas Agreement, should the Government not complete the roads in time for Gas Project construction, the Project will complete the pipeline rights-of-way (ROWs) as a public road linking