Australian oil and gas company Santos on Tuesday announced the start of Front-End Engineering and Design (FEED) for the Dorado field development in the Bedout Sub-basin, offshore Western Australia. Contracts are expected to be awarded in the next few months, Santos said.
Dorado is an oil and gas project which is planned to be developed in two phases. Phase 1 development involves the production of oil and condensate through a well head platform (WHP) and floating production, storage, and offloading facility (FPSO). Phase 1 has an estimated gross capital cost of approximately US$2 billion, assuming a purchased FPSO, Santos said.
"The selected concept of an FPSO and WHP allows for the optimal integrated development of both the gas and liquids resource and retains sufficient flexibility to support future exploration success. Gas will be reinjected in the initial phase to enhance oil and condensate recovery," Santos said.
Phase 2 of the project located in Commonwealth waters, around 160 kilometers north of Port Hedland, will then develop the significant natural gas resources in the Bedout Sub-basin and provide future backfill supply to Santos’ current WA domestic gas infrastructure assets.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said Dorado is expected to have an initial gross oil production rate of between 75,000 to 100,000 barrels per day of "high-quality crude that is expected to earn a premium to regional pricing benchmarks."
"Entering FEED for the Dorado project is a significant milestone and has the project on schedule for a final investment decision around mid-2022, building on the investment decision on the Barossa gas project earlier this year,” Gallagher said.
"Dorado is on track to be the first development in the Bedout Sub-basin, with its high-quality reservoirs and shallow-water setting, making it a very cost-competitive project globally.
“Dorado is also a very low CO2 reservoir with approximately 1.5 percent CO2, and with all gas reinjected in the initial phase, making it one of the lowest emission intensity oil projects in the region.
“After the initial phase of liquids production, gas export from the development allows for a future source of supply into our domestic gas infrastructure in Western Australia.
“Potential nearby tie-in opportunities, starting with the Pavo and Apus prospects to be drilled early next year, could be easily tied-back into the Dorado infrastructure and materially increase the value of the project, due to the very low cost of development,” Gallagher said.
FEED contracts for the FPSO and WHP design are being finalized and are expected to be awarded over the next few months, Santos said.
"This follows the competitive pre-FEED phase of the project where top-tier contractors have been engaged for these major work packages," the company said.
Santos has an 80 percent interest in the Dorado project and is the operator. The remaining interest is held by Carnarvon Petroleum.
To remind, Carnarvon in August last year said that the pre-FEED competition for the supply of an FPSO for the Dorado project was well advanced with BW Offshore, Modec, and Altera (formerly Teekay).
Santos is currently seeking interest from the market to sell down a non-stake in Dorado and potentially other WA oil assets.
Carnarvon, which owns a 20 percent stake, said it has engaged advisers to fund its share of the development and will formally engage with financiers once FEED contracts for the FPSO and WHP have been finalized.
"There continues to be strong market interest in the project. Preparation of the Offshore Project Proposal and Field Development Plan is also well advanced," Carnarvon said.
Carnarvon Managing Director and CEO, Mr Adrian Cook, said: “The Dorado project is a world class resource and we are very pleased to commence FEED. This is an important step which has us on track to achieving a Final Investment Decision around mid-2022.”
“This will be the first development in Bedout Sub-basin, containing high-quality reservoirs and fluids in shallow water which we expect to result in strong returns for our shareholders. We are also on track to test two large exploration targets near Dorado that have the potential to materially
add value to the Dorado project.”