By Russell Searancke, Upstream Online

Efforts to finalise major engineering, procurement and construction contracts for the US$2 billion Dorado oil and gas project offshore Western Australia are progressing carefully while the project owners navigate cost concerns and regulatory chaos in Australia.

Dorado is one of the largest oil discoveries off Western Australia in decades, and the only significant pre-sanctioned liquids development Down Under.

Dorado is considered to be Australia’s best hope for improving its security in liquid fuels, according to the analyst EnergyQuest. The top end of the range of proposed annual gross production of between 27 million barrels and 36 million barrels is more than current national production.

The project was motoring along last year towards a final investment decision, until operator Santos hit the brakes citing cost inflation pressures and supply chain uncertainties.

Santos used the timeout to incorporate the Pavo satellite field discovery into the design of the development, and engaged with the market on cost improvements.

However, the chaos caused by federal court decisions against the national petroleum regulator Nopsema has thrown a spanner in the works for proposed offshore projects.

Woodside’s large Scarborough gas project has received an unfavourable federal court decision regarding the environment plan for a seismic survey, while Santos’ large Barossa gas project is being held up as the company was forced by the federal court to resubmit its environment plan.

As a result, Santos is not intending to sanction Dorado until its Barossa issues are tidied up.

Its joint-venture partner Carnarvon Energy said in its latest project guidance that securing environment plan approvals for the Dorado development activities, historically addressed after final investment decisions for offshore projects, will be progressed ahead of a final investment decision for Dorado due to recent industry uncertainty caused by stakeholder challenges to other projects.

“We remain confident that this matter will be resolved collectively by the industry and government, and look forward to commencing stakeholder consultation as part of the DoradoEP process in the not-too-distant future,” Carnarvon chief executive Adrian Cook said.

Santos said recently it is working towards a final investment decision in the second half of 2024. “I’d need to see that we are well progressed on Barossa before we want to take another offshore project through FID in Australia,” said chief executive Kevin Gallagher, who is working reduced hours until the end of this year to support a relative undergoing medical treatment. 

Dorado’s EPC opportunities 

The Dorado phase one development concept is based on a large floating production, storage and offloading vessel, and an offshore wellhead platform.

The FPSO is being designed to accommodate the subsea tie-in of Pavo at some point in time after Dorado starts up.

The early front-runner for the FPSO contract was an alliance between Altera Infrastructure and Sembcorp Marine (now Seatrium) which did the front-end engineering and design work, but market sources reiterated that new competitors will be invited to bid as Santos is unhappy with the FPSO capital costs it has so far received.

It will be a large FPSO — oil production is expected to peak at about 100,000 barrels per day, and gas handling facilities, including gas reinjection, will be at 220 million cubic feet per day. The FPSO’s oil storage capacity will be up to 1 million barrels.

The floater will be double hulled with a disconnectable turret mooring system to enable it to move off location during bad weather. 

As for the offshore wellhead platform, Malaysian company Sapura Energy has performed a FEED contract, but market sources said Santos is keeping its options open as to which contractor will provide the EPC services. 

The Dorado platform will have a 3500-tonne steel jacket and a 1600-tonne topsides. It will host 16 well slots and dry trees, three risers and umbilicals, and minimal processing equipment. 

Due to the subsurface conditions at the field location, the platform will be secured in position on the seabed by a steel gravity-based structure. 

Project supported by Asian partner 

In August, Taiwanese company CPC Corporation completed the acquisition of a 10% interest in Dorado and nearby exploration permits from Carnarvon. This means Santos has an 80% interest with Carnarvon and CPC holding 10% each. Santos also, as Gallagher said recently, is focused on “getting to the right JV equity levels” by reducing its interest. 

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