Santos Announces Western Oz Gas Find (Update)

(Adds analyst comment at end)

Australian Santos April 16 announced a successful appraisal of the Corvus field, with Corvus-2 confirming a significant gas resource in the Carnarvon Basin, offshore Western Australia.

The well, located in petroleum permit WA-45-R, in which Santos has a 100% interest, is some 90 km northwest of Dampier in Commonwealth waters and reached a total depth of 3,998 metres. The well intersected a gross interval of 638 metres, one of the largest columns ever discovered across the North West Shelf, Santos said.

Wireline logging to date has confirmed 245 metres of net hydrocarbon pay across the target reservoirs in the North Rankin and Mungaroo formations, between 3,360 and 3,998 metres.

Corvus-2 is some 3 km southwest of Corvus-1, which was drilled in 2000. The water depth at location is 63 metres.  The field is approximately 28 km from the Reindeer platform, which delivers gas to the Devil Creek domestic gas plant near Karratha, and about 62 km to a Varanus Island tie-in point.  Santos has a 100% interest in all these facilities.

Santos CEO Kevin Gallagher said: "Corvus-2 has delivered a fantastic result and has opened up a number of additional exploration opportunities in the region."

"Corvus could be tied back to either our Devil Creek or Varanus Island gas plants, where it has the potential to increase the utilisation of our existing facilities as well as provide backfill and extend plateau well into the 2030s,” Gallagher said.

LNG backfill option for NWS partners

However, analysts at Wood Mackenzie thought different: LNG exports are an option, as the local market is already well supplied and this field could hold 2.5 trillion ft³ of gas and 25mn barrels of condensate. The field is near to Santos' Reindeer development and if the resource comes in over 2 trillion ft³, Santos will explore opportunities to export the gas as LNG. This is due to Corvus' proximity to the Burrup Peninsula, and a well-supplied domestic market in the short-to-medium term, it said.

"The North West Shelf has LNG production capacity available from 2021. The Corvus discovery could fill this ullage. If an LNG backfill development is to progress, we expect Santos will look to sell down, as it currently holds 100% in the find. One of the North West Shelf partners would be a logical entrant."