Santos and its partners in the Australian GLNG project near Gladstone will invest more than A$400 million ($303 million) in the 137-well Arcadia gas project in the Bowen Basin in Queensland’s Central Highlands region.
The investment is in addition to the A$900 million the partners are investing in upstream developments in the Maranoa, Western Downs, Central Highlands and Banana regions of Queensland this year, Santos said in a statement on Thursday.
This represents Santos’ first big investment since it rejected a $10.8 billion takeover bid by U.S.-based Harbour Energy.
“This initial phase of the Arcadia development will at its peak deliver in excess of 75 TJ/day to the gas supply for the GLNG project. This is great news for both the domestic gas market and our LNG exports,” Santos Chief Executive Officer Kevin Gallagher said.
The project, located near Injune, about 680km northwest of Brisbane, will involve drilling 137 new wells and constructing a 140 km gas and water gathering network, two 4G communication towers, a new compression station, a 4 ML per day water treatment plant, a 5 MW gas-fired power station, and associated roads and infrastructure.
Gallagher said the decision to sanction the project follows a very successful 13-well pilot program which tested changes to the planned well design and operating philosophy.
“We have reduced our connected well costs in Queensland by more than 70 per cent since 2015 to become Australia’s lowest cost onshore operator,” Gallagher said.
“If you want to put downward pressure on gas prices, reducing the cost of supply is a good place to start,” he said.
He added that Santos would apply the company’s low cost operating model, and a well design and water management approach tailored for the Arcadia field, to extract more gas for less money.