Santos to commence $300m Timor Sea drilling program to extend Darwin LNG

THE momentum towards the sanctioning of the $5 billion Barossa gas infill project 300km off the coast of Darwin has gathered pace with Santos’ announcing its $300 million Bayu-Undan infill drilling program Final Investment Decision yesterday.

• Darwin on track to become national Santos gas hub after $2.2bn deal

THE momentum towards the sanctioning of the $5 billion Barossa gas infill project 300km off the coast of Darwin has gathered pace with Santos’ announcing its $300 million Bayu-Undan infill drilling program Final Investment Decision yesterday.

The Bayu-Undan field is 500km from Darwin in the Timor Sea and the infill drill program comprises three production wells (two platform and one subsea) and will extend field life as well as production from the offshore facilities and the Darwin LNG plant.

The wells will be drilled using the Noble Tom Prosser jack-up rig, with the first well scheduled to spud in the second quarter of this year and production from the first well expected after July.

Mining and Industry Minister Nicole Manison said the $300 million Bayu-Undan infill drilling program will be a significant boost for the Territory economy and for Territory jobs.

“Our economy is showing some of the best economic indicators in the country, and Santos’ Final Investment Decision is further proof that we are emerging from the COVID crisis with a headstart on the rest of the nation,” Ms Manison said.

“As identified by the Economic Reconstruction Commission the private sector is the engine room for the Territory’s growth.

The $300 million Bayu-Undan infill drilling program will be a big boost for the NT economy. Picture: Supplied

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And the Territory government will continue to do everything it can to make the NT the easiest place in the country to do business.”

Santos managing director and chief executive officer Kevin Gallagher said extending the life of the Bayu-Undan field will mean more jobs and investment for Territorians and reduces the period of time the Darwin LNG facility is offline before the $5 billion Barossa project comes on stream.

“At the end of last year, we announced the tolling arrangements had been finalised for Barossa gas to be processed through Darwin LNG and we signed a long-term LNG sales agreement with Diamond Gas International, a wholly-owned subsidiary of Japan’s Mitsubishi Corporation,” Mr Gallagher said.

“This is a major achievement in a difficult and uncertain market, and a sign of the confidence Japanese buyers have in Darwin LNG as a reliable and internationally competitive LNG supplier.

“The tolling arrangements and offtake agreement are critical commercial milestones on the path to a final investment decision for the $5 billion Barossa project – a decision we hope we can take in the first half of this year.”

Mr Gallagher said it has been a big couple of months for the Barossa project and Santos’ role in the Territory.

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“In December our board and many of our senior executive leaders spent a few days in Darwin to speak with businesses, government and the community about the opportunities we see in the Territory,” he said.

“As I said at the time we purchased the Conoco assets, Santos wants to make Darwin and the Northern Territory a core part of our universe.

“We are excited about Barossa, one of the lowest-cost LNG developments in the world, and the onshore opportunities in the Beetaloo and South Nicholson basins, where we plan to drill four wells over the next two years.”