Australian giant gas project facing potential delays due to court injunction

Australian energy giant Santos is being prevented from continuing its planned work on the Barossa gas field development project offshore Australia due to an interim injunction, which was granted by the Federal Court of Australia. In a few days, the decision will be made on a potential further extension of the injunction until the final hearing. If granted, this has the potential to hinder the project’s schedule and cost estimates.

According to Santos, the Federal Court of Australia granted an interim injunction on November 2, 2023, to prevent the company from starting to lay the Barossa Gas Export Pipeline (GEP) until November 13, 2023. This decision is in connection with an application made by Simon Munkara, seeking an order to make Santos revise and resubmit the environment plan (EP) that was accepted by the regulator, NOPSEMA, in March 2020.

The FID for the project was taken in 2021, kick-starting the $600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years. Operated by Santos on behalf of the Upstream Joint Venture partners, the Barossa field is located 300 kilometers offshore Darwin. This development entails an FPSO vessel, subsea production wells, supporting subsea infrastructure, and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. The first gas production is targeted for the first half of 2025.

Munkara alleges that laying the Barossa GEP will impact submerged Tiwi cultural heritage, creating a new environmental risk, however, Santos has complied with a general direction issued by the regulator NOPSEMA in January 2023 in relation to impacts on underwater cultural heritage places to which Indigenous people have spiritual and cultural connections. Due to this, the firm rejects the allegations in the application.

“An independent expert anthropologist concluded there were no such underwater cultural heritage places, following interviews with around 170 Tiwi people and extensive archaeological and anthropological literature and studies. These studies included consideration of independent expert archaeological, geological and sedimentological assessment of the pipeline route,” explained Santos.

Furthermore, the company also updated the EP to reflect the recommendations of the independent expert anthropologist, through its approved management of change process which is part of the GEP EP. The Australian giant underlines that it respects the cultural heritage of the Tiwi people and appreciates the existence of a range of views. However, the company adamantly claims that it has complied in full with the requirements of the general direction as stipulated by NOPSEMA.

The court will determine on November 13, 2023, whether to extend the injunction until the final hearing, which is expected to be held on an expedited basis. Therefore, the company confirms that the pipelay vessel will be held in Darwin and no pipelay activity linked to the GEP will be undertaken during the interim injunction.

Currently, Santos’ guidance on the Barossa project’s cost and schedule remains unchanged, provided the GEP pipelay is completed in 2023, and drilling activities begin before the end of the year. The Australian player plans to assess any impact on the schedule and cost of the Barossa gas project if the injunction is extended beyond November 13, 2023.

The Barossa GEP will run from the Barossa gas field 262 km offshore along a narrow underwater corridor. The pipe has a maximum diameter of 86 cm and will lay directly on top of the seafloor in water depths ranging from 33 to 254 meters. There will be no excavation of the seabed. At its closest point to land, the pipeline will be more than seven kilometers offshore from Bathurst Island in Commonwealth waters where the water depth will be around 70 meters.

Several deals have been handed out for the Barossa field development project. BW Offshore won the contract for the construction, connection, and operation of an FPSO for the Barossa field back in March 2021 and hired Dyna-Mac in May to build the topside modules. The FPSO Barossa project was approximately 73% complete at the end of July 2023.  

This will be a large FPSO with a processing capacity of up to 800 million standard cubic feet per day (mmscfd) of gas and a design capacity of 11,000 barrels per day of stabilized condensate.