Australian energy company Santos has confirmed it will move forward with the Agogo production facility (APF) tie-in project in Papua New Guinea (PNG).
The final investment decision (FID) on the project follows approval by the PNG LNG joint venture (JV) partners.
The initiative involves delivering gas from the Santos-operated APF to the PNG LNG gas pipeline through a new 19km pipeline. The plan also includes adding two new wells and making changes to existing production infrastructure.
Santos Australia and PNG chief operating officer Brett Darley said: “Key regulatory approvals are in place, required land access has been secured and all material joint venture approvals have been obtained.”
Through the project, Santos expects an incremental production capacity of approximately 135 million standard cubic feet per day (mscf/d). The company’s net share of this will be around 54mscf/d.
Santos’ capital expenditure (capex) for the project is estimated at $160m, while total project costs are projected to reach $400m over three years. The timeline for first gas is set for the second quarter of 2028.
The project’s capex has been factored into Santos’ existing guidance.
Santos CEO and managing director Kevin Gallagher said: “The APF Tie-In Project is a high-quality development with strong economics and a clear role in our strategy to build and grow portfolio production.
“The execution of this project will convert Santos’ 66mmboe 2P [66 million barrels of oil equivalent proved and probable] undeveloped reserves into developed reserves, delivering incremental net production of ~54mscf/d with significant upside potential depending on reservoir performance.
“With an expected internal rate of return (IRR) of greater than 50% and a payback period less than four years from FID, and approximately two years from first gas, the project is expected to be strongly value accretive, support our long-term production profile and sustain feed gas supply to PNG LNG.”
Santos owns 39.9% of the PNG LNG JV. Its partners are ExxonMobil PNG, Kumul Petroleum, ENEOS Xplora and the Mineral Resources Development Company.
Last month, Santos reported the completion of the Quokka-1 appraisal well on the North Slope in Alaska, which contributed to further understanding of the Nanushuk reservoir within the Quokka Unit.
