Santos Limited has resumed development work on its Barossa gas project in the Timor Sea, after several legal challenges to its offshore drilling permit and environmental plan around the laying of a pipeline were dismissed.
In mid-January, the Federal Court dismissed a legal challenge by a group of Tiwi Islanders to the construction of a pipeline as part of the Barossa project, and lifted a temporary injunction that had stopped Santos from beginning works in the area.
The decision followed regulator NOPSEMA approving an updated drilling program for the project in December 2023, after the previous drilling permit was overturned when a different Federal Court case found Santos had not properly consulted Tiwi traditional owners.
With these legal and regulatory hurdles out of the way, Santos increased the budget for Barossa by up to US$300 million, bringing the total cost of the two-thirds-complete project to about $US$4.6 billion.
Santos Chief Executive Officer and Managing Director Kevin Gallagher said that given the challenges of the past two years around the project, the cost and schedule guidance had to be updated.
He said: “The team has done a great job in keeping Barossa close to the original schedule and managing the costs of delay.”
Gallagher added that pipelaying and drilling for the project was now fully underway.
Despite overcoming the challenges, some analysts have said Santos’ experience had created a lot of regulatory uncertainty, which could lead to similar legal battles against other major gas projects around Australia.
MST Marquee Head of Energy Research Saul Kavonic, noting the Barossa project stood out as one of the highest carbon dioxide emitting projects in the world, said there was scope for more challenges to be brought against Barossa and other projects.
He said: “The challenges that we’ve seen brought by the Environmental Defenders Office over the last 18 months has completely changed the regulatory landscape in Australia.
“It’s to the point where there’s no longer any certainty that when a company gets an approval to do a project, they can actually then do that project.”
Scheduled for first production in the first half of 2025, the Barossa project will supply replacement gas to the Darwin LNG (DLNG) plant, which is currently supplied by the soon-to-be-depleted Bayu-Undan field near Timor-Leste.
Gas will be extracted about 285 kilometres offshore from Darwin and transported via pipeline to DLNG, with other project infrastructure including a floating production storage and offloading (FPSO) facility, a subsea production system, and supporting in-field subsea infrastructure.
Up to eight subsea wells are planned to be drilled, with six wells from three drill centres and contingency plans for an additional two wells.
After gas and condensate is extracted from the wells through the subsea production system, it will be transferred to the FPSO via a network of subsea infrastructure.
FPSO leasing company BW Offshore, which is constructing the newbuild FPSO for Barossa, said in February it had made progress on the topside module integration for the facility, named the BW Opal.
Nine of the topside modules including the E-house have so far been lifted, while the first shipboard turret module was integrated into the hull on 4 February.
BW Offshore said: “This was a very critical lift, flawlessly executed using the Asian Hercules III floating crane.
“The module itself, is an extra source of pride to BW Offshore as the shipboard turret is designed and managed completely inhouse.”
Topside module integration works on BW Opal began in Singapore after the hull, which is 358 metres long and 64 metres wide, was sailed from the SK Oceanplant shipyard in South Korea, where it was constructed over 22 months in six giga blocks which were joined in a floating dock.
The FPSO will have a processing capacity of up to 800 million standard cubic feet of gas a day and a design capacity of 11,000 barrels of stabilised condensate a day.
In February, Santos and its Barossa joint venture partners announced an investment of up to $10 million in Northern
Territory coastal Aboriginal communities and homelands as the development phase of the project progresses.
The investments will be aimed at improving community and homeland infrastructure and services, as well as projects that enable Aboriginal people to maintain cultural practices and carry out cultural obligations; care for their country; and establish pathways to skilled, well-paying and secure jobs and business opportunities.
Moreover, the JV partners signalled they were supportive of establishing a fund from the start of production in 2025 for the life of the project, which would share the benefits of the project directly with coastal NT Aboriginal communities.
Gallagher said the Barossa joint venture partners were committed to real and practical action to help close the gap on Aboriginal disadvantage in the Northern Territory.
He added: “Achieving better employment outcomes for Aboriginal Territorians depends on investments such as Barossa gas and DLNG life extension to provide new job, business and other opportunities.”
Gallagher noted the projects were already training and employing Aboriginal Territorians, including through a new jobs project with KAEFER, which is providing scaffolding, mechanical and fabric maintenance services for the DLNG plant.
He said: “This program has already been a resounding success, with over 90 applicants to date.
“Fifteen Aboriginal trainees and apprentices will start with KAEFER at the end of February with a second group to commence in the May/June period later this year.
“Sharing the benefits of projects like Barossa is a meaningful step we can take towards closing the gap.”
Santos, as operator of the Barossa JV, engaged with leaders from the Tiwi Islands, East Arnhem, West Arnhem, Darwin-Daly-Wagait and Victoria River District regions throughout 2023.
