PERTH (miningweekly.com) – Oil and gas major Santos and its joint venture (JV) partner Carnarvon Energy have accepted a production licence offer covering the Dorado oil field in the Bedout Sub-Basin in Commonwealth waters, about 150 kilometres north of Port Hedland.

Carnarvon said on Tuesday that the National Offshore Petroleum Titles Administrator has offered to grant the JV a life-of-field production licence (PL) in respect of the four blocks containing the Dorado field.

Once granted, the PL enables the joint venture to produce petroleum from the licence area, as well continue to explore for, and appraise, any additional petroleum within this area.

The PL will also allow the production of petroleum from other areas via the licence area. This means proximate resources, like the recently discovered Pavo oilfield, can potentially be tied-back and produced using the Dorado floating production, storage and offloading (FPSO) vessel.

“We are pleased to be offered a PL in respect of the Dorado field. Grant of the PL is an important milestone as the joint venture works towards being ready to make a final investment decision (FID) in the middle of this year,” said Carnarvon MD and CEO Adrian Cook.

“Relevantly, the terms of the PL will allow for the tie-back of future discoveries, such as the recently discovered Pavo oilfield, creating the potential for significant upside where other petroleum resources in the Bedout sub-basin are produced using the Dorado facilities.

“Developments like Dorado are critical to ensuring energy demand in the Asian region continues to be met, and will play an important role in Australia’s long-term energy security.”

Federal Resources and Water Minister Keith Pitt on Tuesday welcomed the development as a significant step towards a major new oil project.

“At a time when Australia needs energy security more than ever, it’s great to see a new Australian oil project, discovered by Australian companies Santos and Carnarvon Energy, moving closer to being production-ready,” Minister Pitt said.

“The original Dorado-1 discovery made in 2018 represents the most significant new oil play offshore Western Australia in the last decade and opened up the Bedout and Beagle sub-basins as a major new oil and gas province for Australia.”

This was followed up in February 2022 by the successful Pavo-1 exploration well, drilled 46 km east of the Dorado field. 

Pitt said that with that success and now the acceptance of the production licence offer, the Dorado project was moving towards an FID and production.

Initially the project will concentrate on oil production and reinjection of the associated gas. Later production will recover natural gas for use in Western Australia.

Santos MD and CEO Kevin Gallagher said the PL was an important step on the path towards an FID on the Dorado project.

“The PL builds on recent momentum for the Dorado project following the significant Pavo-1 discovery last month that has the potential to add further material value to the development,” Gallagher said. 

“Global oil and gas markets are seeing increased volatility and western countries are looking to diversify their supply sources away from Russia which, according to the International Energy Agency, currently produces 18% of the world’s gas and 12% of its oil. 

“In this environment, Dorado and Pavo have the potential to bolster Australia’s national energy security while Australian LNG projects help to meet the energy needs of our allies.”

Pitt said given current uncertainty around the world, Australia must maintain its focus on developing its traditional oil and gas along with new energy metals and materials.

“I want to congratulate Santos and Carnarvon on their success with Dorado. This multibillion-dollar project will enhance our oil security for the future. There is no doubt Australia needs new oil projects if we are to maintain our energy security and ensure our long-term national security. These projects bring new jobs and new investment into our oil and gas sector. 

“Australia’s security and that of our friends, allies and trading partners will be founded on our ability to continue to attract new energy and resources investment, and our success in bringing on new projects like Dorado.”

Santos has an 80% interest in the Dorado project and is operator, and the remaining interest is held by Carnarvon Petroleum.

The project is currently in the front-end engineering design phase, and the partners are targeting an oil production rate of between 75 000 bbl/d and 100 bbl/d.