PERTH (miningweekly.com) – Oil and gas major Santos is facing headwinds at its Barossa gas project, after the Federal Court on Wednesday set aside the acceptance by the National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) of an environmental plan covering the drilling and completion activities in relation to the Barossa gas project.
The Court’s decision was based on a finding that Nopsema could not be lawfully satisfied that the Drilling Environment Plan met the criteria required by the regulations and in particular failed to assess whether the drilling environment plan demonstrated that Santos consulted with each person that it was required by the regulations to consult with.
The relevant drilling activities were to occur at a site in the Timor Sea, 140 km north of the Tiwi Islands.
Santos told shareholders that as a result of the decision, the drilling activities would be suspended pending a favourable appeal outcome or the approval of a fresh environment plan. Santos will be seeking to expedite these processes.
“This is a disappointing outcome. Consistent with previous practice, Santos engaged about the proposed drilling activities with the Tiwi Land Council, a representative body with statutory authority under the Aboriginal Land Rights Act.
“Similarly, Santos had engaged about the proposed drilling activities with the Northern Land Council, the Native Title representative body for the Tiwi Islands. Nopsema had accepted our efforts to consult with Tiwi Islanders in accordance with the Regulations when it decided to accept the Environment Plan for those activities,” the company said in a statement.
“Given the significance of this decision to us, our international joint venture partners and customers, and the industry more broadly, we consider that it should be reviewed by the Full Federal Court on appeal.”
The Barossa gas project is 46% complete, following a final investment decision (FID) in March of last year, with first liquefied natural gas (LNG) having been targeted for the first half of 2025.
Santos said that the now-suspended drilling activities were not on the critical path for the project and that the company had headroom in the project cost contingency.
“Santos appreciates the strong support from our Japanese and Korean joint venture (JV) partners, who have, in good faith, and on the back of Australia’s historical reputation as a safe and stable investment destination, invested in this project.
“Project approval uncertainty is a public policy issue that should be urgently addressed by Australian governments to reduce risk for trade and investment in projects around the country,” the company said.
The Barossa project comprises a floating production, storage and offloading vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline.
Santos and its Barossa JV partners also recently took an FID to proceed with the Darwin pipeline duplication process, which would extend the Barossa gas export pipeline to the Santos-operated Darwin liquefied natural gas (DLNG) facility and allow for the repurposing of the existing Bayu-Undan to Darwin pipeline to facilitate carbon capture and storage options.
Gas from the Barossa field, located 300 km north of Darwin, is intended to replace the current supply from the Bayu-Undan facility located in Timor-Leste.
First gas production at DLNG using Barossa gas is targeted for the first half of 2025.
Santos said on Wednesday that the company was committed to continuous improvement in its consultation processes, and that its relationships with the Traditional Owners, local communities and landholders where it operates were very important to it.
“Barossa is an important gas project for the nation, enhancing jobs, exports, and our relationships with investors and gas customers in Asia who have depended on Australia for their energy security for decades,” the company said