Subject: AAP: Santos says companies should share infrastructure in Timor Sea


July 15, 2003, Tuesday

Santos says companies should share infrastructure in Timor Sea


Australia's largest domestic gas producer, Santos Ltd, is calling on companies in the Timor Sea to use common infrastructure to reduce duplication and help boost the production and downstream industries.

Santos northern Australia commercial manager Mike Price today backed the notion of common infrastructure in the Timor Sea to promote growth in the industry.

"Working together industry and government can save substantial development costs and increase the number of Timor Sea marginal fields which become economic," Mr Price told an Australian Pipeline Industry Association function in Brisbane.

"We believe the way to bring the gas onshore is through a joint effort with customers, industry and government.

"Opportunities exist through co-operation in infrastructure to maximise total recoveries and to reduce costly duplication."

Santos has said common infrastructure would benefit the company's Petrel Tern fields, but could also link other fields such as the massive Sunrise field.

Santos is looking to a future in offshore gas after more than 40 years in onshore gas centred around the Cooper Basin.

Santos is the only Australian company involved in the massive $2.3 billion Bayu Undan liquefied natural gas (LNG) development in the Timor Sea, which cleared its final regulatory hurdles last month.

million in the development, its first foray into LNG production.

Mr Price said the company's track record in gas supply in Australia was second to none and Santos would endeavour to provide gas to meet Australia's future needs.

"Santos had its origins in onshore gas in the Cooper Basin, and we are now moving forward to be part of the exciting future in offshore gas," he said.

He said the Queensland experience - where business development was attracted once gas became available at a competitive price - would be the case in the Northern Territory.

"We need to ensure the gas is developed and produced cost effectively - transported efficiently - and finally priced to ensure gas remains a strong incentive for industry development in the long term," Mr Price said.

"We believe a long-term view on bringing gas ashore from the Timor Sea will assist in supplying future energy markets."

There were a number of large projects seeking gas in the NT, with Alcan at Gove requiring up to 40 petajoules per annum (PJPA).

Woodside Petroleum last month beat Santos to snare the multi-million dollar deal to supply Blacktip gas to Alcan's proposed $1.5 billion expansion in the NT.

The former MIM Holding's McArthur River zinc project in NT also needed 25-50 PJPA, adding a substantial base load increase to the existing NT domestic gas market.

Before it was taken over last month by Xstrata plc, MIM had signed a conditional heads of agreement with the Highlands gas partners, in Papua New Guinea, to buy gas.

Energy giant ConocoPhillips will build the pipeline from the Bayu Undan gasfield, 500km north-west of Darwin, to a new Darwin LNG facility to supply Japanese customers for 17 years from 2006.

Santos expects the combined liquids and LNG project will add more than six million barrels of oil equivalent at peak production - equal to about 10 per cent of Santos' 2002 production.

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