Photo: Dorado project; Source: Santos

Santos makes ‘important step’ on the path towards Dorado FID

Australian energy company Santos has made what it described as an important step on the path towards a final investment decision on the Dorado project located offshore Australia, which is expected in mid-2022.

Australia’s Minister for Resources and Water, Keith Pitt, in a statement on Tuesday welcomed a significant step towards the development of the Dorado oil field following an acceptance of a production licence offer covering the field by Santos and its partner Carnarvon Energy.

The Dorado field is located in the Bedout Sub-Basin in Commonwealth waters, about 150 kilometres north of Port Hedland.

Dorado - Santos
Dorado project; Source: Santos

In a separate statement on Tuesday, Carnarvon said that the granting of the production licence enables the joint venture to produce petroleum from the Licence Area, as well as to continue to explore for, and appraise, any additional petroleum within this area.

As a reminder, Santos launched the front-end engineering and design (FEED) phase for the Dorado project in late June 2021 and awarded the FEED contract for the Dorado FPSO to Altera Infrastructure last August.

“At a time when Australia needs energy security more than ever, it’s great to see a new Australian oil project, discovered by Australian companies Santos and Carnarvon Energy, moving closer to being production-ready,” Minister Pitt said.

“The original Dorado-1 discovery made in 2018 represented the most significant new oil play offshore Western Australia in the last decade and opened up the Bedout and Beagle sub-basins as a major new oil and gas province for Australia.”

This was followed up in February 2022 by the successful Pavo-1 exploration well, drilled 46 kilometres east of the Dorado field. The discovery provides an option for a low-cost tie-back to the first phase of the Dorado development.

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Santos is now preparing to drill the second well in the campaign, the Apus-1 well.

As explained by Carnarvon, the production licence will also allow the production of petroleum from other areas via the License Area. This means proximate resources, like the Pavo oil field, can potentially be tied back and produced using the Dorado FPSO.

According to the Australian government, with the success at Pavo and now the acceptance of the production licence offer, the Dorado project is moving towards a final investment decision and production. Initially, the project will concentrate on oil production and reinjection of the associated gas. Later production will recover natural gas for use in Western Australia. Dorado is a low emissions intensity development.

Santos Managing Director and Chief Executive Officer, Kevin Gallagher, said the Production Licence was an important step on the path towards a final investment decision on the Dorado Project.

“The Production Licence builds on recent momentum for the Dorado Project following the significant Pavo-1 discovery last month that has the potential to add further material value to the development,” Gallagher said.

“Global oil and gas markets are seeing increased volatility and western countries are looking to diversify their supply sources away from Russia which, according to the International Energy Agency, currently produces 18 per cent of the world’s gas and 12 per cent of its oil.

“In this environment, Dorado and Pavo have the potential to bolster Australia’s national energy security while Australian LNG projects help to meet the energy needs of our allies.”

Minister Pitt stated that this multi-billion dollar project would enhance the country’s oil security for the future.

He added: “There is no doubt Australia needs new oil projects if we are to maintain our energy security and ensure our long-term national security. These projects bring new jobs and new investment into our oil and gas sector. Australia’s security and that of our friends, allies and trading partners will be founded on our ability to continue to attract new energy and resources investment, and our success in bringing on new projects like Dorado.”

Carnarvon Managing Director and CEO, Adrian Cook, said that the granting of the production licence is an important milestone as the joint venture works towards being ready to make the FID in the middle of this year.

As recently reported, Carnarvon has been working to secure its share of funds for the Dorado project. In late March, the company announced that its fully underwritten institutional placement to raise approximately A$70 million from professional and institutional investors was successful. The proceeds will be used to bring the Dorado liquids development to the Final Investment Decision.

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