03/12/2019 - 11:20

Santos moves towards $2.2bn Dorado development

03/12/2019 - 11:20

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Developing the Dorado oil project will cost up to $2.2 billion, with front-end engineering and design to start next year, Santos revealed today, while forecasting $60 million of investment in Western Australia in 2020.

Santos moves towards $2.2bn Dorado development
Kevin Gallagher says Santos is positioned for growth. Photo: Gabriel Oliveira

Developing the Dorado oil project will cost up to $2.2 billion, with front-end engineering and design to start next year, Santos revealed today, while forecasting $60 million of investment in Western Australia in 2020.

Feed work for Dorado is targeted for the June quarter of 2020, with between eight and 10 wells anticipated at the field, connected to a floating production and storage platform.

The company estimated recoverable oil resources of 126 million barrels.

It comes less than 18 months after Quadrant Energy announced the discovery of the field.

Quadrant was later bought by Santos in an acquisition. 

Today, Santos said it would focus on oil and condensate production at Dorado, with gas export for consideration later.

One positive was that water depth was shallow, which would allow for a simple wellhead platform at the field, the company said.

Across the Bedout Basin, where Dorado is located, Santos said there was a low drilling cost and minimal previous exploration activity.

Two further wells are in the pipeline in the next two years, at Pavo and Apus, subject to approval of the company’s partners.

There are four other WA developments in planning.

At Varanus Island, Santos hopes to start up a compression system by 2021, while one well is to be drilled at Spartan to tieback into the island by 2022.

At Van Gogh oil, an infill program is planned for late 2021.

There is also an infill program at the Pyrenees field on the radar, although detail was limited.

Further north, the Barossa brownfields development is expected to move to a final investment decision by March 2020.

That project will supply gas to the Darwin LNG plant, which will otherwise have excess capacity growing in the next decade.

Barossa will cost about $4.7 billion, Santos projected.

Santos has upped its exposure to northern Australia in recent weeks through a takeover of ConocoPhillips’ Darwin LNG and Barossa stakes in a $2.2 billion deal.

Speaking at the company’s investor day in Sydney, chief executive Kevin Gallagher said Santos was positioned for disciplined growth.

“Our strategy has been to establish a disciplined low-cost operating model that delivers strong cash flows through the oil price cycle,” he said. 

“Our 2019 forecast free cash flow breakeven oil price is now around $US29 per barrel.

“The recently announced acquisition of ConocoPhillips’ interests in northern Australia and Timor-Leste1 will further reduce our breakeven oil price and deliver operating interests in long-life, low-cost conventional natural gas assets and strategic LNG infrastructure.

“We are now positioned for disciplined growth leveraging existing infrastructure in all five of our core assets, which we believe will deliver 120 million barrels of oil equivalent by 2025.”

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