Australian player takes a rain check on FID for giant oil project

Australian energy giant Santos has put off a final investment decision (FID) for a huge oil development project in the Bedout Basin off the coast of Western Australia (WA).

With the receipt of acceptance from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) of the offshore project proposal (OPP) in hand, the FID for the Santos-operated Dorado oil development offshore Australia was anticipated to come in 2025.

However, Santos’ partner, Carnarvon Energy, has revealed that the operator decided not to move forward with the purchase of the floating production storage and offloading (FPSO) vessel previously identified as an option for the Dorado Phase 1 liquids development project.

As Santos has also decided not to enter the front end engineering and design (FEED) at this stage, this deferral signifies that the previously anticipated FID target in 2025 will need to be postponed as well. As a result, the joint venture is currently reviewing the timeline for the project.

“The Joint Venture has great confidence in Dorado and the greater Bedout Basin assets and is committed to extracting maximum value from them for the Joint Venture and is planning towards drilling further exploration wells in 2026 in accordance with tenure commitments,” highlighted Carnarvon.

When it was discovered in 2018, the Dorado oil field was deemed to be the largest oil discovery made on Western Australia’s North West Shelf in three decades. Santos is the operator of the project and holds an 80% interest, while its partners, Carnarvon and CPC, each hold a 10% interest in the Dorado discovery.

Philip Huizenga, Carnarvon Chief Executive Officer, commented: “Given the quality of the Dorado project, we at Carnarvon are disappointed by this latest deferral to the project. Carnarvon is fully supportive of the Joint Venture’s desires to realise value for the asset and will support any initiatives for drilling as soon as possible.”

Uncovered as part of the greater Phoenix exploration campaign in the Bedout sub-basin, this project is perceived to be an important development in Australia’s energy landscape, estimated to hold about 162 million barrels of light oil and condensate on a gross 2C basis. 

Combined with the estimated gross 748 billion cubic feet of 2C contingent gas resource, Dorado has been assessed to hold a gross 2C contingent resource of 344 million barrels of oil equivalent. An appraisal program in 2019 de-risked the development, which is currently in the FEED phase. 

Based on the field development for the project, the oil and condensate from Dorado will be produced through a well-head platform and tied back to an FPSO vessel capable of processing 75,000 to 100,000 barrels per day. 

This is not Dorado’s first delay, as Santos postponed it in August 2022 because of the inflationary cost environment and supply chain uncertainty, which did not support the FID target in 2022.

An oil discovery at the Pavo-1 well, drilled in 2022 with the Noble Tom Prosser jack-up rig, is said to provide an option for a low-cost tie-back to the first phase of the Dorado development.