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Santos seeks investors for Dorado as $2bn oil project enters FEED

© Supplied by APPEAKevin Gallagher - Santos CEO at the 2021 APPEA conference in Perth, Australia.
Kevin Gallagher - Santos CEO at the 2021 APPEA conference in Perth, Australia.

Australia’s Santos today announced that its large Dorado oil project offshore Western Australia has started the front-end engineering and design (FEED) phase. Santos is also seeking buyers for a share in the development, which has a “very low” carbon dioxide footprint and is expected to initially cost $2 billion.

The field’s first phase of development could potentially mark one of the largest oil field developments seen in Australia over the past decade. Phase one will involve the production of oil and condensate through a well head platform and transported by two kilometres of subsea infrastructure to an FPSO.

This concept allows for the optimal integrated development of both the gas and liquids resource and retains sufficient flexibility to support future exploration success. Gas will be reinjected in the initial phase to enhance oil and condensate recovery with initial gross oil production expected between 75,000 and 100,000 barrels per day. Santos said the high-quality crude is likely to earn a premium to regional pricing benchmarks.

Phase two will then develop the significant natural gas resources in the Bedout Sub-basin and provide future backfill supply to Santos’ current Western Australian domestic gas infrastructure assets.

FEED contracts for the FPSO and platform are expected to be awarded over the coming months with a final investment decision (FID) expected around mid-2022.

“Dorado is on track to be the first development in the Bedout Sub-basin, with its high-quality reservoirs and shallow-water setting, making it a very cost-competitive project globally,” claimed Kevin Gallagher, chief executive of Santos.

“Dorado is also a very low carbon dioxide (CO2) reservoir with approximately 1.5% CO2, and with all gas reinjected in the initial phase, making it one of the lowest emission intensity oil projects in the region,” added Gallagher.

“Potential nearby tie-in opportunities, starting with the Pavo and Apus prospects to be drilled early next year, could be easily tied-back into the Dorado infrastructure and materially increase the value of the project, due to the very low cost of development,” said Gallagher.

Investors wanted

Santos, which has an 80% operated interest in Dorado, is seeking buyers for a 20-30% stake in its large Dorado oil project and Bedout exploration portfolio offshore western Australia estimated to be worth up to $200 million. The remaining interest is held by Australia’s Carnarvon Petroleum.

Dorado has around 150 million barrels of contingent resources in the exciting Bedout basin offshore northwest Western Australia.

Rystad Energy is estimating a 20-30% stake in the Dorado discovery to be valued between $100 to $200 million.

The offer comes with high-graded exploration prospects, Apus and Pavo, which Santos plans to drill in late 2021/22 and other significant exploration potential. The Bedout basin holds prospective resources of 990 million barrels of oil equivalent, about half of which is estimated to be oil.

The Dorado oil and gas discovery sits in the WA-437-P exploration permit in the Commonwealth waters offshore Australia.

Carnarvon said today that is “has engaged advisers to fund its share of the development and will formally engage with financiers once FEED contracts for the FPSO and platform have been finalised. There continues to be strong market interest in the project.”

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