PERTH (miningweekly.com) – ASX-listed Santos has completed the commissioning and start-up of its $400-million Scotia project, in the Bowen basin of Queensland.
The company told shareholders that the project was completed ahead of schedule and under budget, with initial full field production exceeding 40 TJ/d, in line with expectations.
The project will supply about 70 TJ/d at peak production in late 2019, significantly boosting gas supply to the Santos Gladstone liquefied natural gas (GLNG) project and benefiting both the east coast domestic gas and export LNG markets.
“The project was estimated to cost A$493-million, but the team has delivered it for A$416-million, 16% under budget,” Santos MD and CEO Kevin Gallagher said on Thursday.
“Site infrastructure is also running three months ahead of schedule and some of the well completions are a year ahead of time.”
More than 400 people worked on the project, which involved expanding the Scotia compression plant and field from 23 to more than 100 wells, building 85 km of linear infrastructure, two 4G communications towers and an irrigation system for water treatment.
Queensland Mines Minister Dr Anthony Lynham has welcomed the commissioning of the Scotia project, saying it was a further fixed capital investment in the state’s A$70-billion LNG industry, that supports 7 000 oil and gas jobs, generating billions in revenue including A$9.8-billion in LNG exports over the 12 months to February 2018.
“Petroleum royalties alone are forecast to be A$151-million in 2017/18, growing to A$328-million in 2020/21.
“This helps sustain our regional communities, and puts doctors and nurses in hospitals and teachers into schools, now and into the future.”
Meanwhile, Santos has announced the sale of its noncore Denison Trough assets in Queensland to Orient (Denison Trough), owned by a consortium of Shandong Order Gas Company and Orient Energy, for up to A$43-million.
Santos has received A$22-million in cash at completion and is entitled to further contingent payments of up to A$21-million if certain milestones are achieved by the purchaser. Santos expects to record a profit on sale at completion of about A$70-million.
Gallagher said the sale of the Denison assets was consistent with Santos’ ongoing strategy to realise value from its noncore assets.