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Santos to supply GLNG with Cooper Basin natural gas

Oilfield Technology,

Santos will source the 750 PJ of gas it has agreed to supply from its eastern Australian gas portfolio, with existing uncontracted Cooper Basin 2P reserves being the primary supply source.

The gas supply to GLNG is consistent with Santos’ strategy of developing its significant Australian gas reserve and resource position through both the domestic and LNG export channels to market.

With an oil-linked pricing formula, the agreement not only accelerates monetisation of Cooper 2P reserves, but provides a key catalyst for longer-term investment in the Cooper Basin. 

The gas will be supplied over a period of 15 years commencing in 2014 and is conditional on a final investment decision on GLNG train two.

Santos Chief Executive Officer David Knox said the agreement delivers significant value to Santos’ Cooper Basin position by opening an export channel for Cooper gas and accelerating its monetisation.

“The oil-linked pricing will underwrite future investment in the Cooper Basin and unlock the potential of the Basin’s remaining substantial resources,” Mr Knox said.

Santos has a 66.6% interest in the South Australian Cooper Basin Joint Venture. The other participants are Beach Energy (20.21%) and Origin Energy (13.19%).

Beach Energy is currently drilling exploratory wells in shale formations in the Cooper Basin to attempt to determine the geological characteristics of the formations, but analysts have pointed out that it may be uncompetitive to exploit the reserves, over cheaper coal seam gas. It is thought that unconventional shale gas may be worked into the deal as well.

“In combination with Roma underground gas storage, supply of conventional Santos portfolio gas will enable GLNG to optimise both CSG field development and LNG train ramp up. These levers provide GLNG with a significant strategic advantage,” Mr Knox said.

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