Santos receives Australian government approval for giant Narrabri gas project

Sydney — Australian LNG exporter Santos has received key federal government environmental approval for its giant onshore Narrabri gas project, which has the potential to free up more supply for export via the company's Gladstone LNG facility.

The environmental approval paves the way for Santos to begin a 12-18 month appraisal program on the coal seam gas project, which will precede a final investment decision, Santos said Nov. 24.

Santos CEO Kevin Gallagher said the conditions of the approval were consistent with those given by the state of New South Wales' Independent Planning Commission on Sept. 30 and "generally in line with those for our GLNG operations".

Narrabri has the potential to produce up to 200 terajoules/day, or half of NSW's gas demand, for at least 20 years, the IPC noted at the time.

The project in the Gunnedah Basin is intended to supply the domestic market, but should indirectly result in additional supply availability for GLNG at Gladstone in the neighboring state of Queensland.

"For example, Cooper Basin gas previously destined for NSW now has potential to be displaced by Narrabri production, thereby allowing Santos to send more Cooper Basin gas across to its underutilized GLNG project," RBC Capital Markets analyst Gordon Ramsay said in a research note at the time of the NSW IPC announcement.

Santos, along with Australia's other east coast LNG projects Australia Pacific LNG and Queensland Curtis LNG, have come under pressure from the federal government in recent years to ensure domestic supply amid concerns of shortages since the development of the export projects.

QCLNG was the first to begin LNG exports in January 2015, with the two other projects following suit over the next 12 months.

GLNG produced 4.24 million mt of LNG over January-September, up from 3.77 million mt in the same period of 2019, according to Santos' operational reports. It produced 5.16 million mt over calendar 2019, well below its nameplate capacity of 7.8 million mt/year.