Big explosion at Australia's Big Lake gas field leaves questions for Santos

ENERGY NEWS EXCLUSIVE: A 63- terajoule per day subsurface gas pipeline connecting Santos' Big Lake gas field to the Moomba processing facility blew up in January leaving a "massive" crater in the Cooper Basin.

Big explosion at Australia's Big Lake gas field leaves questions for Santos

 The incident is another safety problem for the company after several incidents offshore Western Australia, and other issues, that have led activist investor groups to protest remuneration for top managers. Once such example is UK investment firm Snowcap which called for a halt to executive bonuses, in particular the $6 million one off payment to managing director Kevin Gallagher. 

Santos confirmed the explosion to Energy News on Wednesday night after this publication approached it for comment. 

"In January, a stress-related failure of the Big Lake pipeline resulted in the release of natural gas," a spokesperson told Energy News.

"The operations team acted quickly to immediately stop the release and prevent further inflows to the pipeline. 

"Repairs were completed in around a week, and an additional fortnight of testing and inspections ensured the integrity of the entire pipeline."

However, sources speaking to Energy News were less measured. 

"It's lucky [the explosion] wasn't under a school or near a town," one source said on condition of anonymity.

Energy News has agreed to keep the names of the three managers and two onsite workers who corroborated the incident anonymous.

The "major" incident was also verified via the South Australian Department for Energy and Mining.

A spokesperson for the South Australian regulator said they were only able to confirm an "incident at a gas pipeline" associated with the Big Lake field, but would not provide further comment. They did confirm it was a Santos project involved, however. 

The departmental spokesperson said a formal report was being prepared by Santos, but it was not expected for three months after the incident, and that details in the report would not be made public. 

"Santos is finalising a review of the incident and a final report will be submitted to the regulator," the Santos spokesperson confirmed. 

Santos shares the Big Lake project in production licences PPL 11 and PPL 1 with Beach Energy which holds a 33.40% interest. 

The partners have been conducting a widespread re-development campaign across the Big Lake field since 2018. This includes a 13-well program being currently undertaken.

Back in 2018, when in-fill development drilling had just started, Santos CEO Kevin Gallagher declared the company was "breathing new life" into the Cooper Basin with new drilling at Big Lake. 

The incident revealed by this publication occured roughly four years later. It is not the only pipeline incident at the aging field. 

One source speaking to Energy News about the most recent series of events, called the incident that occured in January "massive" and that it was the result of infrequent inspections.

"It'll push back operations [at the Big Lake field] by around nine weeks if not longer."

According to them, the pipeline was heavily corroded.  

Another source told Energy News the emissions could be "at scale" and cause "significant" problems to Santos' social licence and bonuses for staff based on the company's environmental performance. 

A fourth source told Energy News implied the explosion was of such force that it could have caused a "catastrophic outcome". 

Santos has not publicly acknowledged the incident, however, earlier this year Gallagher said in an email to staff that the work conducted by maintenance crews and contractors was a "great job". 

"Since my last blog, I wanted to say well done to all the folks involved in the Big Lake and John Brookes recovery projects," Gallagher said in the email seen by Energy News

"It was a great effort from all of you in getting those repairs carried out and getting the assets back online without any safety incidents.

"Great job."

The offshore John Brookes gas platform resumed production in February this year after a gas leak in Western Australia. 

Not the first incident at Big Lake

In an annual report presentation for financial 2021, Beach Energy noted that Santos was undertaking inspections of the trunkline at Big Lake "to reduce the chance of further unplanned shutdowns." 

An issue with the trunkline impacted gas production from the Cooper Basin during October that year, it said. 

Much earlier on, a 2001 report to the South Australian government, Santos said it had identified deterioration at the Big Lake trunkline. 

"The pipeline failed due to internal erosion downstream of the transition weld to the meter run riser," Santos' report said.

"Piping repaired, review in progress of "high" velocity wells."

Two decades later, in 2020 another incident occurred at Big Lake. The Serious Incident Report Is not public, however Santos requested an extension to lodge reports to the South Australian department. 

The company confirmed to Energy News it last inspected the pipeline in 2021. 

Bonuses on the line

The Santos executive team and board receive short and long term incentives based on a series of metrics including safety and environmental management, 

Since the last annual general meeting, activist investors claim the company has underperformed in environmental and safety responsibilities.

Over the last 12 months, there have been five safety incidents at its Varanus Island gas project offshore Western Australia. 

Dead dolphins were also found near an oil slick associated with a Santos project in the Varanus Island region, as first reported by WA Today. 

Santos was subsequently accused of attempting to "cover-up" this incident by an unnamed whistleblower who provided a statement to Parliament. 

Santos has denied the spill was responsible for the dead dolphins. 

Elsewhere, Santos was forced to shut down the John Brookes platform and Devil Creek gas plant following a gas leak.

A month ago, UK-based activist investor firm Snowcap took aim at Santos' environmental performance dubbing it an "unacceptable environmental & safety record". 

Snowcap noted that Santos' hydrocarbon spill rate was "more than double" of its peers such as Woodside and ConocoPhillips. 

"All hydrocarbon tier 1 and tier 2 loss of containment incidents are included in the metrics on executive scorecards," the Santos spokesperson said. 

Santos also recorded a higher total injury rate than any of the 48 companies who self-reported last year. 

Santos heads to its 2023 annual general meeting today. 

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.


ENB CCS Report 2024

ENB’s CCS Report 2024 finds that CCS could be the much-needed magic bullet for Australia’s decarbonisation drive


ENB Cost Report 2023

ENB’s latest Cost Report findings provide optimism as investments in oil and gas, as well as new energy rise.


ENB Future of Energy Report 2023

ENB’s inaugural Future of Energy Report details the industry outlook on the medium-to-long-term future for the sector in the Asia Pacific region.


ENB Cost Report 2021

This industry-wide report aims to understand current cost levels across the energy industry