ConocoPhillips has made a natural gas discovery in the Otway Basin off the Australian coast, the company said today, adding that the reserves tapped and their commercial viability have yet to be estimated.
“The Essington-1 well is the first discovery in the Otway since 2021 and is a promising start to ConocoPhillips’ exploration activities in the region. The initial results are encouraging, and we look forward to continuing drilling our second exploration well in December,” the president of Conoco’s Australian operations, Jan-Arne Johansen, said.
ConocoPhillips has a 51% in the Otway Basin project, with partners including Korea National Oil Corporation and Australian 3DEnergi. The company joined the drilling project in 2019. Prior to that, it was a shareholder in Darwin LNG, in Northern Australia, but it sold its stake there to local major Santos for $1.4 billion, also in 2019.
ConocoPhillips is the operator of Australia Pacific LNG, in partnership with Origin Energy and China’s CNOOC. The facility is the largest LNG production site in eastern Australia, producing close to a third of the natural gas that the region consumes. Due to a looming shortage, however, the project could be hit with mandates to secure domestic supply before exporting LNG, like other LNG producers in Australia.
The so-called Australian Domestic Gas Security Mechanism was supposed to make sure there was enough natural gas for local consumers, but, according to some, it has so far made more harm than good. Measures tried so far have included mandating gas producers to set aside a certain amount of uncontracted gas for the domestic market and forcing LNG producers to deliver less gas to their clients and divert more of the commodity to the domestic market. Per the Australian Competition and Consumer Commission, “overall, they have not materially improved outcomes for gas users.”
By Irina Slav for Oilprice.com
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