ConocoPhillips, a major player in the energy industry, has recently announced a natural gas discovery in the Otway Basin off the Australian coast. The company disclosed that while the reserves tapped are promising, their commercial viability is yet to be estimated. This discovery comes as a significant development in the region, marking the first discovery in the Otway since 2021.
Jan-Arne Johansen, the president of ConocoPhillips’ Australian operations, expressed optimism about the Essington-1 well, emphasizing that it is a promising start to the company’s exploration activities in the area. He mentioned that the initial results are encouraging and that they are looking forward to continuing drilling their second exploration well in December.
ConocoPhillips holds a 51% stake in the Otway Basin project, with partners including Korea National Oil Corporation and Australian 3DEnergi. The company’s involvement in the drilling project dates back to 2019 when they joined the initiative. Prior to this, ConocoPhillips was a shareholder in Darwin LNG in Northern Australia but decided to sell its stake to local major Santos for $1.4 billion in 2019.
In addition to its activities in the Otway Basin, ConocoPhillips operates the Australia Pacific LNG facility in partnership with Origin Energy and China’s CNOOC. This facility is the largest LNG production site in eastern Australia, contributing significantly to the region’s natural gas supply. However, with a looming shortage in the domestic market, there are concerns about the need to secure domestic supply before exporting LNG, similar to other LNG producers in Australia.
The Australian Domestic Gas Security Mechanism was introduced to ensure an adequate supply of natural gas for local consumers. However, some critics argue that the measures implemented thus far have had limited success in improving outcomes for gas users. These measures include mandating gas producers to allocate a certain amount of uncontracted gas for the domestic market and directing LNG producers to prioritize the domestic market over exports.
In conclusion, ConocoPhillips’ natural gas discovery in the Otway Basin signifies a significant step forward in the company’s exploration activities in the region. As they continue to assess the commercial viability of the reserves tapped, the energy industry will be closely watching to see how this discovery impacts the broader Australian energy market.
By Irina Slav for Oilprice.com
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