Cooper step closer to Sole FID after singing fourth gas sales deal

Cooper Energy has signed a binding gas sales agreement with EnergyAustralia for the Sole gas field, off Australia, and moved a step closer to the project’s final investment decision (FID). 

The company said on Wednesday that the agreement is for the supply of 5 PJ per annum from the Sole gas field for a minimum of 5 years with provision for a 3-year extension, subject to the parties’ agreement.

The Sole gas field is located in VIC/RL3, offshore Victoria approximately 62 kilometers from the Orbost gas plant, onshore Victoria, where Sole gas will be processed and delivered to the Eastern Gas Pipeline.

The agreement is conditional upon completion of the transaction for Cooper Energy to acquire Santos’s Victorian Gas assets announced on October 24, 2016, and an affirmative final investment decision (FID) for Sole.

Cooper currently holds 50% interest in VIC/RL3 and Orbost gas plant. The acquisition of Santos’ share in Sole will result in Cooper Energy holding a 100% equity in the field, which is assessed to contain Contingent Resources (2C) of 2411 PJ of gas.

The agreement with EnergyAustralia is the fourth signed by Cooper Energy for the field and takes the annual contracted quantity to 14.6 PJ of the 25 PJ annual production anticipated from the field for the first 8 years. Cooper Energy said it anticipates committing up to 85% of the annual volume prior to FID and is currently engaged in discussions with gas buyers on sale agreements for the remaining quantity.

Step closer to FID

The EnergyAustralia agreement follows agreements with O-I Australia, AGL and Alinta Energy. Cooper Energy Managing Director David Maxwell said that the latest agreement is another step in the company’s strategy to build a portfolio of blue-chip gas contracts and a step closer to an affirmative FID for the Sole gas project.

“Our agreement to acquire Santos’ Victorian assets has substantially expanded our gas contracting opportunity and we are delighted to add EnergyAustralia to our portfolio of gas supply customers” said Maxwell.

“There is keen interest in contracting gas from Sole and we expect to finalize additional off-take contracts within the next few months. The market outlook is positive and, thanks to the strong support and commitments we have received from major energy retailers and industrial users, we are close to finalizing a quality gas contract portfolio ahead of FID for the Sole project,” he said.

EnergyAustralia Managing Director Catherine Tanna said the agreement reflected the company’s commitment to investing in new sources of gas supply for its customers.

“Australia depends on reliable and affordable supplies of gas to warm homes, power businesses and to sustain jobs,” Ms Tanna said. “And the reality is that if we’re to move away from coal-fired power, we will require more gas-fired generation to balance increases in intermittent renewable energy.”

Sole FID is expected to occur in the March quarter 2017, with first gas from the project scheduled by March 2019. Supply to EnergyAustralia under the agreement would start on January 1, 2020. The effective date for the Cooper Energy acquisition of Santos’ Victorian gas assets is January 1, 2017.