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Crunch time for stalled Barossa gas project

September 21, 2023
Kevin Morrison
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Key Findings

A year after the Federal Court shut down the Barossa gas field development, Santos has not amended its increasingly ambitious production target for the stalled project.

Even if Barossa clears its many regulatory hurdles, Santos may not have a rig to drill the gas field as its contract is due to expire and the equipment is now booked elsewhere.

Investors deserve full and clear disclosure of any material impacts the many legal and environmental issues surrounding Barossa will have on the project's timeline. 

Executive Summary

Australian gas company Santos’ largest project under development, the Barossa gas project, has been impacted by delays on its drilling activity and is not allowed to lay the pipeline to connect the Barossa gas field to Darwin where the gas will be processed.

Drilling activity was first halted following the Federal Court ruling on 21 September 2022 that overturned approvals for the Barossa gas project’s drilling environment plan. This ruling was upheld when Santos lost its appeal on 2 December 2022. This has meant Santos is not allowed to conduct any drilling activity until it has completed its consultation with Indigenous groups. 

Further work was impacted in January 2023 when the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) issued a direction requiring Santos to undertake assessment of Indigenous traditional, spiritual and cultural connections to underwater cultural heritage places along the route of the new Barossa pipeline in the Bonaparte Basin offshore the Northern Territory.

Barossa Santos Timeline of events

Yet despite these major delays, Santos has maintained its original timeline to have the first gas from the Barossa project produced in the first half of 2025. This implies that it plans to complete a four-year construction project in around three years.

There is further uncertainty about the drilling rig Santos has contracted for the Barossa field, once it receives regulatory approval. The company’s contract for the rig expires in October 2023, although Santos says it has options to extend it. However, details of the drilling rig contract have not been publicly disclosed.

After a year of delays, if Santos does not know the timelines for the relevant approvals, it should update the market.

Kevin Morrison

Kevin Morrison is an Energy Finance Analyst, Australian Gas. Kevin works closely with the global oil and gas team to examine issues facing the Australian LNG and gas sector.

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