One of the largest offshore oil discoveries in Western Australia, the Dorado Project, has made ‘significant’ progress towards towards the Final Investment Decision (FID)-ready target for the end of 2024, set by Dorado joint venture partners Santos, Carnarvon, and OPIC Australia.
The Dorado joint venture is in the process of completing a revision of the project design, to improve economics through optimized utilization of the proposed production facilities.
The optimized production capacity is expected to result in a reduction in initial capital outlay and has the potential to accelerate the timetable to first oil production.
As part of the optimization study, the joint venture has identified several idle FPSOs that could be re-purposed for the project which would further reduce the overall cost of the project and time to first oil.
Dorado is operated by Santos with 80% working interest, with partners Carnarvon and OPIC Australia, holding 10% each.
Any design changes would be within the scope of the approved Offshore Project Proposal (OPP), which allows the operator to update the previously completed FEED work with confidence to maintain the existing FID-ready target of end-2024.
“Dorado is an outstanding project, and these optimizations to the development concept would result in a more robust project overall. Optimizing the project with lower upfront CAPEX, faster time to first oil and enhanced economics, would put Carnarvon in a strong position to unlock value for shareholders.
“Carnarvon’s estimates for up-front capital expenditure savings are expected to be material to the Company. With the Company’s $115 million (Au$176 million) cash balance (December 2023), $90 million development funding cost carry and a prospective debt facility, Carnarvon expects to be fully funded for its share of development costs to first oil under the optimized project.
“Carnarvon is also very encouraged by Santos’ ongoing commitment to the Dorado Project being FID-ready by end-2024. I am incredibly proud of the core role Carnarvon is contributing to the optimization process and I look forward to providing further updates to shareholders as we progress towards sanctioning the Dorado development.”
FID on Dorado remains conditional on materially advancing the relevant Environment Plans (Eps) to ensure that project execution can commence as expected. In recent months, there has been notable improvement in the acceptance of EPs and an overall increase in confidence within the oil and gas industry in respect of environmental approvals, Carnarvon.
Dorado Phase 1 Liquids Development
Work performed by the Joint Venture in 2023 through to the early stages of 2024 has revalidated the previously selected concept of an initial Phase 1 liquids development, with the production and export of a light oil product and reinjection of gas back into the sub-surface reservoir.
The joint venture said they continue to explore a number of material economic improvement opportunities for the project.
These include an opportunity to optimize the production rate allowing the joint venture to phase the timing of wells. Subject to ongoing engineering work, a revised capacity between 60,000 to 100,000 bopd could result in only a portion of the wells being required prior to first oil.
Any remaining wells would be drilled during production allowing them to be self-funded through project cash flows. Right-sizing the project and deferring wells after production startup will reduce both the up-front capital outlay and the time to first oil, hence improving project value and returns.
FPSO Deployment Options Under Assessment
The original base case for the Phase 1 Dorado liquids development incorporates the conversion of an existing tanker hull into an FPSO through the additional construction of process equipment, turret, accommodation, and utilities.
Through the optimization process, the joint venture is currently assessing FPSO vessel redeployment options.
Dependent on the suitability and availability of these units, the joint venture believes there could be further cost and time to first oil optimization opportunities for the Project.
Dorado Phase 2 Gas and Exploration Drilling
The joint venture has confirmed that the option remains for a Phase 2 rich gas export development after a period of gas recycle, potentially supporting a broader gas export development from the Bedout Sub-basin subject to future exploration success.
While the partners did have an exploration well in the contingent budget for 2024, due to a scarcity of suitable drilling rigs in Australia at this time, further drilling has been deferred to at least 2025, subject to joint venture and regulatory approvals.
Carnarvon will provide further details on drilling timelines as plans progress, the company said.