Conoco Plans Three Gas Wells in Timor Sea

ConocoPhillips has sought environmental approval for the drilling of up to three appraisal wells on its Barossa gas field in the second or third quarter of 2013.

The campaign, funded by South Korea’s SK Group, seeks to determine whether potentially commercial hydrocarbon resources exist within the field, which was discovered in 2006, Proactive Investors Australia said in a report.

SK had in June agreed to pay up to $520 million for a stake in Barossa and the nearby Caldita gas fields that are located about 300 kilometres north of Darwin.

The first phase consists of $260 million to fund the appraisal drilling, giving SK a 37.5% stake in NT/P69 and NT/P61. The South Korean company will then have the option to increase its interest to 49.5% by making a further payment of $60 million to Conoco and Santos funding up to $90 million for engineering and design work for a liquefied natural gas project; and Final Investment Decision and first LNG cargo payments of up to $110 million.

A successful appraisal could lead to the development of an independent floating LNG project or a tie back to Conoco’s existing Darwin LNG facility.

The latter option could either underpin an expansion of the facility or backfill Bayu Undan when it comes plateau or a combination of both, the report said.