Santos predicts revenues from its West Australian and Northern Territory division could rival those from its east coast and Papua New Guinea business by the end of the decade, as the energy producer looks to target the next wave of liquefied natural gas projects.
The Adelaide-based company has focused much of its investment on its big-ticket stakes in the PNG LNG development, due 2014, and Queensland's Gladstone LNG facility in 2015.
But Santos vice-president Western Australia and Northern Territory John Anderson said there was an expectation the business would switch its focus to material exploration opportunities on the west coast in the latter part of this decade. Last year, WA and the Northern Territory delivered a third of Santos's production and 37 per cent of earnings. Projects to come include the Fletcher Finucane development in the second half of 2013, which will tie into the existing Mutineer Exeter project, and the 2018 Bonaparte floating LNG project at the Petrel and Tern gasfields. Santos is also considering options for its Caldita-Barossa resource in the Timor Sea, possibly feeding into ConocoPhillips' Darwin LNG project.
"When the cash comes off those [LNG] projects, the question will be asked, 'Where does that cash go, what are the future projects that are coming over the horizon for Santos?" Mr Anderson said. "One of the reasons we are doing the [exploration] program is hopefully to set up that future."
Santos has committed to one of its largest ever drilling programs in the region this year, with three offshore rigs drilling seven exploration and appraisal wells.
Much of the excitement surrounds its gas position in the Browse Basin off Australia's far north-west coast, where it's looking to drill the Crown prospect in the second half and process seismic data on its Burnside gas discovery in the next year.
Although Santos is yet to reveal the target size of Crown, analysts point to it as one of the company's most exciting prospects, given it's expected to be a big contributor to the potential 10 trillion cubic feet of gas flagged in the overall block.
Santos also expects to progress its Burnside deposit, found in August 2009, which lies on the same geological trend as Inpex's nearby Ichthys gasfield, to be developed through a $US25 billion LNG project in Darwin, and Royal Dutch Shell's Prelude field, earmarked for a floating LNG venture.
"We're still to lock down our plans for 2013 but there's a reasonable likelihood we will do an appraisal well on Burnside next year," Mr Anderson said.
Citigroup argues Santos holds four commercialisation options if it discovers significant gas volumes in the Browse, including Woodside Petroleum's favoured James Price Point LNG hub, a third train at the Ichthys project, the North-West Shelf in Karratha or even a floating LNG facility.
Mr Anderson agrees the basin is flourishing, as shown by Woodside's recent $US2 billion deal to sell 14.7 per cent of its stake in Browse to Japan Australia LNG (MIMI).
"I think we're fortunate that we have all of those options and opportunities ahead of us. Browse remains a very high interest area for oil and gas companies."
In the Northern Territory, Santos holds a 40 per cent stake in the Barossa and Caldita gasfields. While anxious to advance the development of what he describes as a strategic asset, Mr Anderson strikes a diplomatic tone, given 60 per cent joint venture partner Conoco is the operator of the field.
"We are very keen to see Barossa and Caldita progress with some greater clarity this year," he said. You've seen us bring GDF Suez into Bonaparte LNG, which has unlocked that asset, we've exited Evans Shoals but Barossa Caldita is the remaining piece for us to unlock in this Timor Bonaparte area."
The producer says it is also content with the viability of the Bonaparte project after drilling at its Petrel-7 appraisal well last year and testing the suitability of the gas for a liquefaction unit.
The Santos executive says having the GDF-led Bonaparte development coming on stream in 2018 after the current wave of LNG projects could also prove a blessing.
"GDF are working through the engineering very, very carefully and so far they've seen no show stoppers as to why, from an engineering and technical viewpoint, this project can't proceed," Mr Anderson said.
Copyright 2012 Fairfax Media Publications Pty. Limited. All Rights Reserved.