Santos GLNG project more than 85 pct complete

The US$18.5 billion Santos GLNG project is more than 85% complete and remains on track for first LNG in 2015, Santos said in its first half statement on Friday.

GLNG involves the development of CSG resources in the Bowen and Surat Basins in south-east Queensland, construction of a 420-kilometre underground gas transmission pipeline to Gladstone, and two LNG trains with a combined nameplate capacity of 7.8 million tonnes per annum on Curtis Island.

According to the report, strong construction progress continued across the GLNG project in the first half of 2014. Upstream drilling is ahead of schedule with almost 600 wells drilled since FID. The deliverability of Fairview wells continues to exceed expectations while the Roma field is performing in-line with expectations as de-watering continues. Two of the three upstream hubs have been handed over for commissioning and construction of the third is almost complete.

Commissioning of the 420-kilometre gas transmission pipeline is underway and first commissioning gas is expected to be delivered to the LNG plant in the fourth quarter of 2014.

On the Curtis Island LNG plant site, construction of LNG trains, tanks and supporting infrastructure is progressing well. All Train 1 modules have been set on their foundations and work continues on cable pulling and piping hook-up. Seventeen of the 29 Train 2 modules have also been set on foundations. In total, the module yard has shipped 109 of the 111 modules required for the project with the final Train 2 module expected on Curtis Island in September.

First-half results

Santos’ sales revenue grew by 25% to a first half record of $1.9 billion, primarily due to higher production, higher oil and gas prices, and higher third party crude oil sales.

The average realised oil price for the half-year of A$125 per barrel and the average realised domestic sales gas and ethane price of A$4.91 per gigajoule were 12% and 2% higher respectively than the first half of 2013.

While the average LNG selling price of A$777 per tonne was in-line with the prior half-year, LNG sales revenue was up strongly following the start-up of PNG LNG and strong performance from Darwin LNG.

Following production of 25 million barrels of oil equivalent (mmboe) in the first half, Santos maintains 2014 production guidance of 52 to 57 mmboe. The PNG LNG project reached full production capacity in late-July and is expected to contribute to a stronger production performance in the second half of 2014.

Operating cash flow was up 18% to a first half record $744 million.