Santos Ltd and Beach Energy Ltd have made a final investment decision to proceed with the Moomba Central Optimization (MCO) project involving the Central Fields in South Australia’s Cooper Basin.
The project will replace seven aging gas-run compressor stations with one electric compressor station to “debottleneck upstream infrastructure and unlock future production growth” from the Central Fields, which contain more than half of the basin’s remaining proven and probable reserves, operator Santos said in a bourse filing Monday.
“At the Moomba Gas Plant, new inlet compression and additional power generation capacity will be installed to receive gas and power the upstream satellite”, Santos added.
The Cooper Basin contributed 12 million barrels of oil equivalent (boe) to Santos’ production last year, according to the company’s annual report.
The partners expect to complete the MCO project in 2029. Santos’ investment is AUD 357 million ($250.22 million). Beach said separately its share is around AUD 250 million.
“Santos has fully budgeted this capex and will remain within its AUD 45-50/bbl all-in free cash flow breakeven target”, Santos said.
Santos expects the shift to a more efficient infrastructure to save AUD 600 million in its share of expenditure over the life of the fields. It expects the MCO project to cut the unit production cost by up to AUD 3 per barrel of oil equivalent.
“The Cooper Basin has been a cornerstone of Australia’s gas supply for more than 60 years. The MCO project will unlock significant value by modernizing our infrastructure and extending the productive life of this world-class resource”, said Santos managing director and chief executive Kevin Gallagher.
“Importantly, the project is estimated to reduce Santos Scope 1 emissions by over 40,000 tonnes of CO2 [carbon dioxide] equivalent per year, supporting our Scope 1 emissions reduction targets”, Gallagher added.
Recently Santos signed a binding term sheet with the state government of South Australia to supply 20 petajoules (PJ) a year of gas for 10 years to Whyalla Steelworks.
“Santos gas will be used to enable Whyalla to deploy direct reduced iron technology that can process local magnetite ore to produce low-carbon iron”, Gallagher said in a company statement February 20.
The South Australian government, in the process of selling the plant after placing the owner under administration last year, aims to progressively transform Whyalla into a green plant. Future plans may involve solar and wind power, according to information on the state government’s website.
Gas deliveries by Santos are to start March 2030. The prospective deal would use indexed pricing with a prepayment arrangement, Santos statement.
“The annual contract quantity of 20PJ represents around 30 percent of Santos’ current gas production from the Cooper Basin and is able to be supplied from the Moomba Central Area fields development”, Santos said.
To contact the author, email jov.onsat@rigzone.com
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