Santos says it is holding on to its Barossa and Caldita gas fields in the Timor Sea, ruling out a sale of the assets to fund its liquefied natural gas (LNG) projects in Queensland and Papua New Guinea.
The fields, in the Bonaparte Basin about 300km offshore from Darwin, will instead be used to feed the Darwin LNG plant, Santos Western Australia and Northern Territory vice president John Anderson says.
The fields are 60 per cent held by ConocoPhillips and 40 per cent by Santos.
The US energy giant has a 57 per cent interest in the Darwin LNG plant while Santos has an 11.4 per cent stake.
ConocoPhillips late last year reportedly agreed to sell its stake in the Caldita and Barossa fields, but the transaction fell over after the buyer refused to agree to a condition to feed the gas into the Darwin plant.
Interest in the Bonaparte Basin has risen with Santos last month agreeing to sell its entire working interest in the Evans Shoal gas field, near Barossa and Caldita, to an international major for up to $US350 million ($A351.25 million).
Evans Shoal is a more difficult asset than Caldita Barossa, with its high carbon dioxide content.
It is understood that ConocoPhillips has changed its view on Caldita Barossa in the wake of the Evans Shoal deal, which has re-rated the Bonaparte Basin.
Mr Anderson told reporters after a business function in Perth on Friday that the Evans Shoal deal showed the area was now “much stronger on the radar”.
He said Barossa Caldita could be used as “backfill” for the Darwin plant or for an expansion of the facility.
The possibility of gas from Woodside Petroleum’s Sunrise project in the Timor Sea being fed into the Darwin plant was now gone, with the company favouring a floating processing concept.
Production from the Bayu Undan fields, which currently feeds the plant, would eventually decline so Barossa Caldita would be an important replacement feedstock, Mr Anderson said.
“We see Barossa Caldita as an important asset for the future,” he said.
“(It) is going to be more strategic as time goes by.”
He also said the Apache Energy-operated Devil Creek gas processing plant in Western Australia was on track to produce first gas by the end of this year.
Devil Creek will process gas from the Reindeer field and boost WA’s gas supply capacity by 20 per cent.
The joint venture has four customers for Devil Creek gas and wants to attract more.
Demand for Australian gas is projected to quadruple by 2025, driven by Asian export growth and the increasing needs of domestic industrial customers.
Mr Anderson also warned that the nation’s oil production was not high enough.
“We do have a liquids issue in Australia – production of oil is not keeping apace,” he said.
“We’re hoping to progress a growth story in relation to oil.”
Santos expects to make a final decision to proceed with its Fletcher/Finucane oil project in WA by the first quarter of next year.
The company seeks to maintain an average oil production rate for the first 12 months of output of between 15,000 and 20,000 barrels per day.
Fletcher/Finucane is expected to produce first oil in the second half of 2013.
Santos was down 26 cents at $12.88 on Friday.
