Santos approves drilling project to boost Darwin LNG supplies

Australia’s Santos has approved a $235 million offshore drilling program in the Timor Sea to boost natural gas supplies for its Darwin LNG export plant.

The operator of the Bayu-Undan joint venture announced the FID for the Phase 3C infill drilling program at the Bayu-Undan field offshore Timor-Leste on Tuesday.

Furthermore, the program includes three production wells and will develop additional natural gas and liquids reserves, extending field life as well as production from the offshore facilities and the Darwin LNG plant.

Sanction of the project comes less than seven months after Santos became operator of the Bayu-Undan venture following completion of the acquisition of ConocoPhillips’ northern Australia and Timor-Leste assets.

Moreover, Santos says the JV will drill the wells using the Noble Tom Prosser jack-up rig, with the first well scheduled to spud in the second quarter this year, and production from the first well expected in the third.

“This infill drilling program adds over 20 million barrels of oil equivalent gross reserves and production at a low of cost of supply and extends the life of Bayu-Undan, reducing the period that Darwin LNG is offline before the Barossa project comes on stream,” Santos CEO Kevin Gallagher said.

Santos currently has a 68.4% interest and operatorship in Bayu-Undan and Darwin LNG which will reduce to 43.4% upon completion of a 25% sell down to Korea’s SK E&S.

Gallagher said the sell-down received consent from Bayu-Undan/DLNG joint venture and Timor-Leste regulator before Christmas last year.

Now the firm is working on Australian regulatory approvals and Gallagher expects the sell-down to complete once it takes an FID on Barossa in the first half of 2021.

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