Santos to Bring Online Indonesia's Wortel Gas Field by End-2011

Australian exploration and production company Santos on Friday made a final investment decision approving the development of the Wortel gas project offshore Madura Island in Indonesia, with first gas expected by the end of 2011.

Wortel is located 7 km west of the Santos-operated Oyong oil and gas field and will be developed as a tie-back to Oyong, Santos said in a statement.

The Wortel development includes two gas wells, a minimum facility wellhead platform and a 10 km gas pipeline to the existing Oyong wellhead platform. Development costs are estimated at $100 million, Santos said.

Combined gas production from Oyong and Wortel is expected to average 90,000 Mcf/day. Oyong currently produces about 60,000 Mcf/day of gas and 3,500 b/d of oil.

From the Oyong platform, Wortel gas will be sent via an existing 60 km pipeline to the onshore gas processing facility at Grati onshore East Java for processing and sale, both to PT Indonesia Power under an agreement signed on Friday and to other potential buyers with whom negotiations are ongoing, Santos said, without disclosing details.

Santos, which is also the operator, has a 45% interest in the Sampang production sharing contract alongside the Singapore Petroleum Company (40%) and Cue Energy Resources (15%). The PSC includes the offshore Oyong, Wortel, Peluang 1 and Maleo fields located between East Java and Madura Island.

Santos is Australia's third largest oil and gas producer behind the petroleum division of global resources giant BHP Billiton and North West Shelf operator Woodside Petroleum. Santos produced 12.9 million barrels of oil equivalent in the quarter ended September 30, 2010, up 9% from 11.9 million boe in the June quarter and down 9% year on year, the company said in its most recent production report.

The company is pursuing a major growth strategy in LNG, with an 11.4% interest in the 3.6 million mt/year Darwin plant operated by ConocoPhillips; a 13.5% interest in the ExxonMobil-led 6.6 million mt/year Papua New Guinea LNG project that is due to start in 2014; a 40% interest in a joint venture with France's GDF Suez that is planning a 2 million mt/year floating LNG project in the Bonaparte Basin offshore northern Australia and 45% of the coalseam-based Gladstone LNG project in Queensland, where it hopes to make a final investment decision by year-end on the first of two 3.6 million mt/year production trains.

Wendy Wells
Platts