Santos Lowers Gas Output Forecast
Sydney Morning Herald
Wednesday April 9, 2008
SANTOS has revealed annual production at its $7 billion Gladstone liquefied natural gas project is more likely to be at the lower end of a range it released last year.
Santos has previously said it would cost $5 billion to $7 billion to establish a plant producing 3 million to 4 million tonnes of LNG a year.But the acting chief executive of Santos, David Knox, indicated yesterday 3 million tonnes was more likely, although the final figure was not yet known. He said the plant would cost $7.7 billion in 2007 dollars, including the cost of building a $700 million pipeline from the coal-seam gasfields to Gladstone that was likely be owned by an infrastructure provider.UBS had forecast it would cost $8 billion to build a plant producing 4 million tonnes a year.Santos is considering two different LNG technologies to process the coal-seam gas.The company expects to enter the front-end engineering and design phase by the end of the year after selecting a partner for the development."We are in discussions with a number of parties right now," Mr Knox told media at the Australian Petroleum Production and Exploration Association conference in Perth yesterday.Mr Knox said Santos wanted as simple an agreement as possible and expected to remain the operator of the project. But he added the company might allow its partner to construct the plant. Santos has environmental approval to produce up to 10 million tonnes a year, and Mr Knox said the company planned to build additional production trains to help improve project returns.There are four proposed LNG projects in Gladstone. Santos's main competition is Queensland Gas's project, which is a joint venture with Britain's BG Group. Santos will need to drill about 500 wells before the plant enters production.
© 2008 Sydney Morning Herald
