Santos GLNG preparing to feed first gas into the pipeline.

Photo Contributed
Santos GLNG preparing to feed first gas into the pipeline. Photo Contributed Contributed

Curtis Island gas giant increases drilling for domestic market

A CURTIS Island-based LNG exporter is preparing to send more gas to the domestic market, a new report suggests.

GLNG part-owner, Santos has increased its gas drilling forecasts this year after a strong second quarter.

It means the company will soon be better suited to supply more gas to the domestic market, according to CEO Kevin Gallagher.

The $US17.5 billion project made headlines across Australia in recent months for sending almost all of its gas overseas while the nation forecast a shortage by 2019.

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Mr Gallagher said more efficient and lower cost operations allowed the company to increase drilling at its Cooper Basin and GLNG fields.

The second quarter report, released this week, showed GLNG sold 7.9 petajoules of gas to the domestic market in the past three months, up from 3.3 petajoules the previous quarter.

Santos chief executive Kevin Gallagher.
Santos chief executive Kevin Gallagher.

Between March and June, 41 development wells were drilled in the GLNG fields, and another 18 were suspended until the end of the quarter for "further deepening".

Energy Edge analyst Josh Stabler said Santos made an upgrade to its drilling program in October last year after 18 months of "subdued activity".

"During 2017, the drilling program (in terms of wells drilled per week) has been as active as the primary LNG development phase of 2013 and 2014 when oil prices still remained above USD $100 per barrel," Mr Stabler said.

The increased drilling is yet to show in its production report though, with more than half of its LNG exports delivered via third party gas in the second quarter.

Santos' announcement to deliver more to the domestic market comes amid the start of Resources and Northern Australia Minister, Matthew Canavan's new domestic gas supply policy.

If Senator Canavan deems Australia could be in a domestic gas shortage year, he can divert international gas exports back into the domestic market.

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The report was released two days after Energy Quest announced Australia produced more than 50 million tonnes of LNG in 12 months for the first time.

There was 51.4 million tonnes of LNG exported from Australia.

"With rising Australian LNG export volumes, we are seeing the sector's total export revenue increasing quickly, including record monthly levels towards year's close," Energy Quest chief Graeme Bethune said.

Santos' share price shot up 8.3 per cent, its highest jump in more than seven months, following the report's release.

Debt was reduced this year by $US600 million to $US2.9 billion.



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