Santos has another hurdle to overcome before it and compatriot Carnarvon Energy take the final investment decision on the Dorado field development offshore their native Australia, with sanction already pushed back until at least 2023 because of market conditions.

The partners are awaiting environmental approval in the form of the Offshore Project Proposal (OPP), which is currently under assessment by Australia’s offshore regulator the National Offshore Petroleum Safety & Environmental Management Authority (Nopsema).

The operator is continuing to engage closely with Nopsema to gain acceptance of the OPP, according to Carnarvon managing director Adrian Cook.

Driving down costs will also be key to getting Dorado off the drawing board in a timely manner, with the lion’s share of the phase one development’s capital expenditure being for the lump-sum engineering, procurement and construction contract for the project’s floating production, storage and offloading vessel.

“The main outstanding matter is the finalisation of the EPC contract for the FPSO vessel.” said Cook.

“The joint venture is working with the relevant contractor [understood to be Singapore’s Sembcorp Marine] to ensure the contract is in an acceptable form.

“This requires the cost environment to stabilise and there to be more certainty around supply chain capacity,” he added.

“As the FPSO represents more than 50% of the expected project cost, it is important that this work scope is carefully contracted and managed, especially in the current supply chain environment.

“Whilst the joint venture is working towards the timely sanction of the Dorado development, due to the current inflationary pressures and regional supply chain challenges, the risk of cost escalation is unacceptably high and fiscal discipline is required until this environment shows signs of stabilising,” Cook said on Monday.

Front-end engineering and design work on the Dorado development on Block WA-64-L was substantially completed in the third quarter.

The proposed stage one liquids project is targeting a 162 million-barrel best estimate resource with initial production of 75,000 to 100,000 barrels per day.

Pavo points the way

The project’s economics could be boosted by the tie-back of the recent 43 million-barrel oil discovery dubbed Pavo North, while the partners are assessing options to drill the Pavo South prospect, which is estimated to contain an additional resource of 66 million barrels of oil.

“The potential to tie-back Pavo liquids to the Dorado facilities is a significant opportunity for the joint venture as fluid production rates from Dorado are expected to naturally decline after a plateau period of one to two years, at which time there will be spare capacity in the crude oil handling facilities, allowing for back-fill from new fields such as Pavo,” added Cook.

Studies are being performed to ensure the current Dorado FPSO design is capable of receiving the Pavo fluids with minimal requirement for further enhancements during tie-back operations.

The initial Dorado development involves 10 wells being drilled into four reservoirs — Caley, Baxter, Crespin and Milne — and the hydrocarbons being produced via the 16 slot WHP to the FPSO.

The floater has a design capacity to process 100,000 barrels per day of oil and inject 215 million cubic feet per day of gas, with storage for around 1 million barrels of oil and condensate.

Carnarvon, which has a 20% interest in Dorado and a 30% interest in Pavo, has been advancing plans to secure funding for its share of the Dorado development.

The company has received a number of proposals including traditional reserve-based, non-recourse senior debt facilities and alternative options such as subordinated debt, offtake prepayments and even royalties.

As part of this funding process, Carnarvon is undertaking a formal process to potentially divest a portion of its share of the Dorado project and associated exploration acreage before taking the final investment decision.

“The financing process will be finalised once a lump-sum cost under the FPSO EPC contract can be agreed, and the OPP has been accepted by Nopsema,” said Cook.

“Once both matters are in hand the joint venture will be in a position to proceed to FID.

“With considerable value generating capability, Carnarvon is eager for the timely sanction of the Dorado development and commencement of the construction,” Cook addded.

Stay a step ahead with the Upstream News app
Read high quality news and insight on the oil and gas business and its energy transition on-the-go. The News app offers you more control over your Upstream reading experience than any other platform.