LNG

Australian liquefied natural gas operator Santos has yet to detail any additional progress in its merger talks the Australian peer Woodside Energy for a combination valued at A$88 billion (US$58Bln), though has made advances on the Barossa gas project for Darwin LNG and signed deals with two Japanese companies for the Moomba carbon-capture and storage venture.

Santos, the Australia LNG export plant operator, and its joint venture partner, Beach Energy, said they had committed to proceed with work on their Cooper Basin assets to boost natural gas supply to the domestic market.

Santos said that the programme of works, which includes bringing a fifth drilling rig into the basin and optimising well connections, aims to deliver an additional 15 terajoules of gas per day, the equivalent of 14.2 million cubic feet per day, by the end of the year.

The Cooper Basin spans the state borders of northeast South Australia and southwest Queensland and the Cooper and Eromanga Basins contain Australia’s largest onshore oil and gas field development.

Santos operates the Gladstone LNG export plant in Queensland and the Darwin plant in the Northern Territory and its strategically important domestic assets in the Cooper Basin are linked to key infrastructure at Moomba in northeast South Australia

Santos-operated infrastructure enables the processing and transportation of natural gas and ethane around the East Coast of Australia, supported by substantial underground storage facilities suitable for natural gas, ethane and carbon dioxide.

Australian ministers in the new Labor government, which has been mostly hostile to the hydrocarbon industry for many years at federal and state level, are scheduled to meet in the coming week to discuss the domestic fuel crisis.

Supply shortfalls

This follows the Australian Energy Market Operator clearing the way for the triggering of the Gas Supply Guarantee Mechanism for the first time since the measure was introduced in 2017 to secure domestic gas for power generators amid potential shortfalls in southern states.

Increased Southern Hemisphere winter demand for energy, unscheduled outages at coal-fired power stations and energy shortages have led to rising natural gas and electricity prices across Australia.

Santos Chief Executive Kevin Gallagher said his Adelaide-based company continued to support Australian industry through the delivery of competitively-priced domestic gas.

“Santos will invest more than US$300 million (A$430 million) in the Cooper Basin this year developing and supplying critical fuels such as natural gas for our customers,” explained the CEO.

“This investment will deliver more gas to the domestic market, which is desperately needed,” he added.

“Recent domestic gas supply and price pressures have been caused by a spike in gas-fired power generation to back up renewables and to replace the 30 percent or more of coal-fired power generation that has been offline or not operating since early May,” said Gallagher.

Gallagher stated that the incremental investment in the Cooper Basin builds on the Santos “commitment” to meeting the fuel needs of customers.

Australian LNG operator Santos reported that stronger prices and higher sales volumes delivered a 34 percent increase in quarterly sales revenue to a record US$1.5 billion and even better was expected in 2022 with completed Oil Search merger.