Pikka, Barossa connected

Two projects key to Santos strategy to increase production by 30% by 2027

Kay Cashman

Petroleum News

On Sunday, Sept. 21, Santos Limited said that the BW Opal FPSO (floating production, storage and offloading vessel) has successfully received first gas into the facility to commence production operations.

This follows the BW Opal achieving ready for start-up status on Sept. 16 and the commencement of flow from the subsea wells.

The Sept. 21 event is a major milestone for Santos and its Barossa joint venture partners, PRISM Energy Australia1 and JERA Australia, in delivering the Barossa LNG project.

Pikka Phase I, an onshore oil development on the North Slope of Alaska, and the Barossa LNG project offshore Australia are key to Santos's strategy to increase its overall production by approximately 30% by 2027. The two projects are also expected to generate long-term cash flows to support shareholder returns and future investments.

Barossa is an offshore gas and condensate project expected to begin production in Q3 2025 to supply the Darwin LNG facility, while Pikka is an onshore oil development targeting first oil in Q1 2026.

Santos also reported that all six wells drilled in the Barossa gas field have intersected excellent reservoir quality. Testing has been completed on five of the six wells, "demonstrating outstanding flow capacity that exceeds pre-drill estimates, with expected average potential well deliverability of around 300 million standard cubic feet per day."

This success underscores the robust capacity of the Barossa field to sustain long-term production.

Further, the Northern Territory Environment Protection Authority has renewed the Environment Protection License for Darwin LNG, beginning Sept. 19. This paves the way for first gas into, and start-up of, the Darwin LNG plant.

Santos Managing Director and CEO Kevin Gallagher said, "RFSU for the BW Opal marked the formal transition from project execution to production operations, following RFSU for the Darwin LNG plant upon completion of the life extension work scope and the commencement of production from the offshore subsea wells.

"First gas into the FPSO is an important step for the project and a credit to the hard work of our people and support from our partners. It puts us on track to deliver reliable energy to our customers and long-term value to our shareholders from Barossa LNG," said Gallagher.

The BW Opal is among the largest and most technically advanced FPSOs ever built, featuring a 358-meter hull and accommodation for up to 140 personnel. It has gas handling capacity of 850 million standard cubic feet per day and condensate handling capacity of 11,000 barrels per day.

Industry-leading combined-cycle power generation, incorporating waste heat recovery and steam turbine technology, was used to maximize energy efficiency and is expected to reduce non-reservoir emissions by more than 50% (more than 0.75 million tons of CO2e per year) compared to the Offshore Project Proposal accepted by the regulator NOPSEMA.

The FPSO is the production centerpiece of Santos's Barossa LNG project and will be permanently located in the Barossa gas field approximately 285 kilometers offshore from Darwin in the Northern Territory of Australia. It will feed the Darwin LNG plant for the next two decades.

With RFSU of the BW Opal, Santos will recognize a lease liability of ~US$665 million and a right-of-use asset value of ~US$1.4 billion comprising the lease liability, FPSO pre-payment and other direct costs. The impact of the operating lease liability is expected to increase gearing ~2.4 percentage points.

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