GOT GAS: Santos’ Barossa pipeline victory could lift certainty for gas players

Unless you have been living under the rock or swanning away on a holiday, you would know that Santos has been given the go ahead by the Federal court to lay pipeline for its $5.8bn Barossa gas project.

The court has essentially ruled that the liquefied natural gas producer will be able to resume pipeline installation activities for the gas project that will wind up feeding into its existing Darwin LNG project.

Darwin LNG started production back in 2006, producing LNG using gas from the Bayu-Undan field and did so until November last year when the final cargo of Bayu-Undan sourced LNG was shipped.

The plant is currently undergoing work that will set it up for the next 20 years of production, which will be fed primarily by gas sourced from Barossa.

There are some significant differences between the gas sourced from the two fields though.

For starters, Barossa gas has significantly highly percentages of carbon dioxide, which is also why Santos has plans to capture the CO2 and inject the greenhouse gas into the conveniently available depleted gas reservoirs at Bayu Undan.

How that will compare with Chevron’s still underperforming Gorgon CCS project is anyone’s guess though you can be sure that Santos will be doing its best to succeed where the US supermajor failed.

The other, and considerably less significant (though not to certain parties) difference is that Barossa does not have enough helium for viable extraction, meaning that BOC’s Darwin helium plant that had relied on Bayu Undan helium will remain shuttered.

Not beholden to the green vision

There are some wider ranging implications from the court’s decision.

For starters, it is a clear sign that the Australian judiciary system isn’t just going to side with the green lobby as some have feared, meaning that the rule of law is very much in place.

This does of course work the other way as well, meaning that companies facing environmental pressure before the courts will have to prove their actions will stand up.

However, it certainly provides smaller gas companies with some peace of mind that the courts can’t be used as the beating stick for the green lobby to strike down their plans, a development that could go some way in encouraging them to proceed with their projects.

Along with Federal Energy Minister Chris Bowen acknowledging that new sources of gas were needed, the development is likely to be good news for junior gas explorers who either have exploration planned or resources ready for development but have not signed off due to concerns.

Of course, some companies might be holding out for better support from the state or federal governments before they commit but that might be a stretch too far under current conditions.