The GLNG project is approaching the 95% completion mark. (Source: Santos GLNG)
Santos has narrowed the start-up date for its US $18.5 billion GLNG project on Queensland’s Curtis Island to the end of the third quarter.
Santos said April 17 that the project was approaching the 95% completion mark, with first gas earmarked for the end of September. The company had previously said startup would be achieved sometime in second-half 2015.
David Knox, chief executive and managing director for Santos, described the progress at GLNG over the past year as excellent.
“This announcement highlights our confidence of delivering this transformational project on time and within the US$18.5 billion budget,” Knox said. “The project has continued to go from strength to strength and we have made significant progress on the ground in both 2014 and in the first quarter of this year.
“The delivery of GLNG will consolidate our strategic LNG portfolio and further position us as a key player in the growing Asian gas market,” he said.
The news was released in conjunction with the company’s first-quarter results.
The Adelaide-headquartered company posted a 7% drop in production compared to the December quarter of 14 million barrels of oil equivalent (MMboe). Sales volumes of 15.2 MMboe for the three-month period was 16% lower than the prior quarter but was up 10% on the corresponding period in 2014.
Sales revenue, meanwhile, tipped in at $835 million, down 24% from the December quarter mainly due to a 22% fall in the average realized oil price to $77 per barrel. Total crude oil sales revenue of $223 million for the quarter was 42% lower than the previous quarter, reflecting lower oil prices and sales volumes.
However, Santos said reduced sales revenue was partially offset by stronger domestic gas prices and a weaker Australian dollar.
Knox said the company had taken prompt and decisive actions to respond to the current low oil price environment.
“First quarter capital expenditure was 40 percent lower than last year, and we continue to make solid inroads towards reducing production costs per barrel across the business,” he said.
During the quarter, Santos had some success on the exploration front, announcing a significant oil discovery at the Bestari-1 exploration well offshore Malaysia.
On the development of GLNG, Santos drilled 16 wells in the GLNG acreage during the first quarter, which included 15 development wells in Roma and one appraisal well in Fairview, while 39 wells were completed as producers.
During the quarter, the last of the 71 Fairview Eastern Flank Phase 1 wells were completed and the connection program is well advanced. In total, 467 CSG wells are online.
On the downstream side of the operation, first gas was introduced to the LNG plant in early March with commissioning activities progressing well.
The company has maintained its 2015 production guidance of between 57 MMboe and 64 MMboe at production costs of $14.2/boe to 14.6/boe.
Shares in Santos were trading 6 cents, or 0.7%, higher at $7.99.
Lauren Barrett, associate editor for Oil and Gas Investor Australia, can be reached at lbarrett@hartenergy.com.
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