Santos seeks partner, has bet each way on GLNG

IN AN effort to identify the best technology for its Gladstone LNG project, Santos has awarded two parallel pre-front end engineering design contracts. Foster Wheeler and Bechtel will each undertake a six-month study for the coal seam methane-to-LNG development.
Santos seeks partner, has bet each way on GLNG 

Santos seeks partner, has bet each way on GLNG 

Santos seeks partner, has bet each way on GLNG 

Santos seeks partner, has bet each way on GLNG 

Santos seeks partner, has bet each way on GLNG

Santos acting chief executive David Knox told journalists at the APPEA Conference this morning that the award of these contracts would enable Santos to maintain its project schedule.

A decision to move to a formal FEED process is anticipated by the end of this year or early next year, a final investment decision is expected by the end of 2009, and first LNG cargos are targeted for early 2014.

"By appointing two contractors to separately undertake this evaluation work, Santos will consider the optimum technical design, cost and schedule implications of two different process technologies for GLNG," Knox said.

Bechtel will be studying the ConocoPhillips Optimised Cascade Process, while Foster Wheeler will be working on the Air Products C3MR Process.

"It is pleasing to have such experienced, world class contractors appointed to the project," Knox said.

"These organisations have been directly involved in the design and construction of the last two LNG projects built in Australia - Foster Wheeler in Western Australia, and Bechtel in Darwin."

He said having a dual-track pre-FEED process would cost the company more in the short term, but was an important investment in assuring that the design of the world-first CSM-to-LNG project would be optimised.

According to Knox, since announcing the GLNG project mid last year, Santos has made significant progress in securing a freehold liquefaction plant site in Gladstone, lodging key environmental approval documents and building its upstream gas resources.

"We're seeking approvals for a 10 million tonne [per annum] operation," Knox said.

"The first train will be somewhere around 3 million tonnes, so it's not a question of whether we expand, but of the size and timing of the increments.

"Out upstream work is going well. We're drilling a well day. We have three rigs running and we're having very positive results."

The company is also negotiating with potential partners and expects to have a partner on board before the FEED process begins, according to Knox.

"We've had very good interest and enthusiasm from a wide range of potential partners," he said.

He declined to say what levels of equity Santos was seeking to retain, but said some of these potential partners were "major global players" and the company was seeking to keep any partnership arrangement as simple as possible in order to avoid slowing down the project.

Knox said Santos's experience as operator of South Australia's Moomba gas plant would stand it in good stead, and the company wanted to retain operatorship of GLNG, although it was prepared to let a partner manage construction of the project.