Santos and the Cooper Basin: the next frontier

The Cooper Basin

The Cooper Basin

Santos has a long, proud history in Australia’s prolific Cooper Basin, having explored for oil and gas in the area since 1954.

Yet, with the advent of commercially extractable unconventional gas in Australia, there is a whole lot more the company plans to do in the basin. Gas Today speaks to senior Santos Cooper Basin executives on what’s next for Santos and the Cooper.

Santos General Manager Central Australia Lou Dello says Santos remains confident in the future of the basin.

“The Cooper Basin remains a valuable producing asset for Santos and continues to demonstrate its importance as a key supplier of energy to Australia and Asia, with access to pipeline supply routes, significant hydrocarbon processing capability and a material acreage position,” says Mr Dello.

“Following a decade of decline, production capacity has been re-built over the past three years to meet forecast growing demand on the East Coast.”

As for the company’s future plans in the Cooper Basin, given the recent volatility in global oil prices forcing many oil and gas companies to review existing strategies, Mr Dello says the company will continue to invest in the basin.

“With the recent collapse in oil price, the business has responded by reducing spend in the Basin with a focus to drive productivity and improve efficiencies. Santos, with its joint venture partners in the Cooper Basin, is planning to invest more than $1 billion on behalf of the Cooper Basin JV partners this year.”

PROMISING FIGURES FOR UNCONVENTIONAL DEVELOPMENTS

Santos General Manager Unconventional Resources Carl Greenstreet echoes Mr Dello’s outlook for the development of unconventional resources in the basin, commenting that although it is still early days, Santos remains encouraged by the potential of unconventional resources in Central Australia.

“Across the Cooper Basin in South Australia and south-west Queensland, and the Amadeus Basin and McArthur Basin in the Northern Territory, we have 100,000 sq km of highly prospective acreage in unconventional gas plays,” says Mr Greenstreet.

“The Cooper Basin has significant shale gas potential estimated at in excess of 80 Tcf.”

Mr Greenstreet says the success in 2012 at Moomba-191 was the first step in unlocking that potential.

“Since then we have drilled a total of 11 wells and fracture stimulated and flow tested seven, with highly encouraging gas flows from all of them. Moomba-191 continues to produce at over 1.7 MMscf/d approximately 18 months after coming online.”

Two horizontal shale wells, Roswell-2H and Moomba-193H, have since been drilled and fractured stimulated as a follow up program to the Moomba-191 result, with Moomba-193H currently online as the first shale gas producer currently flowing at 1.1 MMscf/d.

“An emerging unconventional play in the Cooper Basin is the Deep Coal Natural Gas Resource,” says Mr Greenstreet.

“The Cooper Basin’s vast oil and gas reserves have been primarily sourced by the Permian coal units and Santos is a first mover in appraising the resource and commercial potential of this new unconventional play.”

Santos has already been fracture stimulating the source beds in conventional gas wells and flowing natural gas at commercial rates, with the first dedicated Deep Coal producer being Tirrawarra South-1.

“The development of South Australia’s shale and unconventional gas potential will take some time, but we will continue our work to unlock the region’s significant shale and other unconventional gas resources,” says Mr Greenstreet.

“To be successful, Santos and other Australian companies operating in South Australia will need to attract partners who share our confidence that the state’s considerable gas resources can be commercially developed.”

MEETING GLNG VOLUMES

Meanwhile, Santos remains confident that its GLNG Project, nearing completion on Curtis Island, is in a strong position to deliver its contracted volumes over the next 20 years.

Including GLNG’s share of non-operated fields, the project now has 6,000 PJ of 2P reserves, which, when added to the committed Santos portfolio and purchased third party gas, comes to a total of 7,800 PJ.

Additionally, 2C contingent resources bring the total to 9,000 PJ.

COLLABORATION IN A VOLATILE MARKET

In terms of collaboration between Santos and the other Curtis Island LNG Project operators, Santos GLNG has signed two deals with Australia Pacific (APLNG) and QGC to increase the efficiency of all projects through infrastructure sharing and gas swaps.

As for the impact the drop in Brent crude oil price has had on Santos’ future exploration projects, the company has had to take the responsible approach to managing the current low oil price environment, and in doing so has sought to obtain the right balance between sustaining and growth capex.

Its forward oil price assumptions, together with forecasts for the growth of the region, sees Santos confident that it will able to continue to invest for growth into the future – including the company’s exploration program.

On that front, recent exploration success includes a significant gas-condensate discovery at the Lassetter-1 well in the Browse Basin adding to Santos’ strong resource position, following success with the Crown discovery in 2012, as well as a significant oil discovery at the Bestari-1 exploration well offshore Malaysia.

EASTERN AUSTRALIA TO BENEFIT FROM ADDITIONAL SOURCES

Santos also welcomes proposals for the development of the new Northern Territory to East Coast Interconnect Gas Pipeline, which would enable Australia’s abundant gas resources to be delivered to markets.

However, the company says that discussions on such a proposal must be anchored in commercial reality, and while the fact is that eastern Australia will benefit from the development of multiple additional sources of gas supply, the costs of building pipelines and transporting gas cannot be ignored.

Santos’ stance on the proposals is that efforts to bring resources from the Northern Territory to eastern markets should not distract governments from the need to continue to support industry in the development of NSW and Victoria’s own gas resources

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