Santos and its GLNG partners will invest more than $400 million in the 137-well Arcadia gas project in Queensland.
The project, located near Injune in the Central Highlands, is expected to create up to 300 jobs for the region.
It will involve drilling 137 new wells and constructing a 140km gas and water gathering network, two 4G communication towers, a new compression station, a 4ML per day water treatment plant, a 5MW gas-fired power station, and associated roads and infrastructure.
“This initial phase of the Arcadia development will at its peak deliver in excess of 75 TJ/day to the gas supply for the GLNG project,” Santos managing director and chief executive Officer Kevin Gallagher said.
“This is great news for both the domestic gas market and our LNG exports.”
Mr Gallagher said the decision to sanction the project follows a very successful 13-well pilot program, which tested changes to the planned well design and operating philosophy.
“We have reduced our connected well costs in Queensland by more than 70 per cent since 2015 to become Australia’s lowest cost onshore operator,” Mr Gallagher said.
“If you want to put downward pressure on gas prices, reducing the cost of supply is a good place to start.
“Santos will apply our low-cost operating model, and a well design and water management approach tailored for the Arcadia field, to extract more gas for less money.
“Santos is delighted to support jobs and investment in regional Queensland and we want to continue to invest here for many years to come.”
The investment is in addition to the $900 million the company is investing in upstream developments in the Maranoa, Western Downs, Central Highlands and Banana regions of Queensland this year.
The LNG industry already supports 7000 oil and gas jobs, and generates billions in revenue including $9.8 billion in LNG exports in the 12 months to February 2018.
Arcadia is expected to start production in the third quarter of 2019 and produce nearly 27PJ at peak in 2022.