Santos-led Gladstone LNG project on stream

The Santos Ltd.-operated Gladstone LNG project on Curtis Island, Queensland, has been brought on stream on schedule and on budget.

The Santos Ltd.-operated Gladstone coal seam gas-LNG (GLNG) project on Curtis Island, Queensland, has been brought on stream on schedule and on budget.

Train 1 will ship its first cargo of LNG next month, while Train 2 is expected to be ready for start-up by yearend.

Santos said the project’s upstream facilities in the Surat-Bowen basin coal seam gas fields 420 km inland are fully operational and performing well.

The project revenue is backed by binding long-term LNG sales contracts for in excess of 90% of the Curtis Island plant’s capacity. Nameplate total production is 7.8 million tonnes of LNG from the two trains.

Santos has a 30% interest with Petronas of Malaysia 27.5%, Total of France 27.5%, and Kogas of South Korea 15%.

Santos is still considering the sale of at least some of its interest in the project to reduce the company’s $8.87 billion (Aus.) debt. This will be part of a larger sale process of the company’s assets.

In related news, gas from Senex Energy Ltd.’s wholly-owned Western Surat Gas Project (WSGP) in Queensland will supply as much as 50 terajoules/day of gas over a 20-year period to the Gladstone LNG plant in a deal signed with the Santos joint venture this week. The gas price will be linked to the Japanese oil price.

The arrangement underpins a planned final investment decision for the WSGP expected in 2016.

In addition, Senex is hoping to share the use of GLNG’s water treatment and gas processing infrastructure, thus reducing development costs.

Senex has agreed to sell the 77 sq km Maisey block within permit ATP 889 to the north of the Wallumbilla gas hub to the GLNG JV for $42 million (Aus.).

This will boost Senex’s cash reserves for the forthcoming development of WSGP and allow it access to a raft of technical and operating data for the Roma CSG field which will aid its progression to FID.

WSGP involves the drilling of up to 1,000 vertical wells over 30 years, starting in the east and moving west towards the South Australian border.

The plan is to spend $40 million in development over the next few years, beginning with a pilot project in 2016 and building up to a major supply source in later years.

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