Developing the Territory’s onshore gas potential
Colin Cruickshank
Katherine Regional Mining and Exploration Forum May 2014
Santos
Overview
A leading energy company in Australia
and Asia
• Founded in 1954
• Top-20 ASX listed company
• 3500 employ...
Santos’ onshore NT
footprint
A critical region for Santos, now and into the
future
Amadeus Basin
 Farm-in compliments
exi...
Natural Gas
• All natural gas (conventional or unconventional) is predominately
methane
• Differentiator is the rock the g...
Petroleum Operations
Overview
Exploration - Seismic Exploration /
Development - Drilling
Production
Well Construction /
Integrity
Wells are designed to completely isolate all
aquifers
• Drilling stops at regular intervals ...
Fracture Stimulation
• Accelerates the release of oil and gas
• A fluid mixture of 99% water and sand plus a
very small am...
Water Management
Drilling
• On average up to 1 ML of water is used for each well drilled.
Fracture Stimulation
• Up to 20 ...
Well Construction
Drilling / Fracture
Stimulation
• Potential water impacts from well
construction activities
• Spills and...
Well De-commissioning
• Once well is no longer economic to produce it needs to
de-commissioned
• Cement plugs placed to is...
Santos Operations in
the Northern Territory
• Production of oil and gas from Mereenie field in
Amadeus Basin
• Gas product...
McArthur Basin -
Tanumbirini-1
• Drill date:
• June 2014
• TD ~ 4000m / 75 day well
• Targeting Velkerri & Kyalla shales
•...
Southern Amadeus
• Santos has a significant acreage
position in the Southern Amadeus.
• Santos is earning up to 70% equity...
Operations -
Interaction with
Stakeholders
Traditional Owners
• Engagement with CLC and NLC
Local Employment
• 2013 Seismi...
Conclusions
Operations
Santos is dedicated to ensuring safe and sustainable
operations, including close community engageme...
Insert picture
Thank You
16
GLNG Site on Curtis Island
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Colin Cruickshank, Santos Ltd - Developing the Territory’s onshore gas potential

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Colin Cruickshank, General Manager Unconventional Resources and Exploration, Santos delivered the presentation at 2014 Katherine Regional Mining & Exploration Forum.
The 2014 Katherine Regional Mining & Exploration Forum featured presentations from explorers active in the region, operating mines, project developers and the many other parties associated with resources projects being developed in the wider Katherine region.

For more information about the event, please visit: http://www.informa.com.au/katherinemining14

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Colin Cruickshank, Santos Ltd - Developing the Territory’s onshore gas potential

  1. 1. Developing the Territory’s onshore gas potential Colin Cruickshank Katherine Regional Mining and Exploration Forum May 2014
  2. 2. Santos Overview A leading energy company in Australia and Asia • Founded in 1954 • Top-20 ASX listed company • 3500 employees • Production of 51 mmboe • Proved and probably reserves of 1,368 mmboe • 2013 sales revenue $3,602m • 2013 net profit $516m after tax • Extensive exploration, development and production operations through Australia and SE Asia Otway Basin Phu Khanh Basin Nam Con Son Basin East Java Basin Papua New Guinea Carnarvon Basin Browse Basin Timor Sea & GapBonaparte Basin Amadeus Basin Cooper Basin Surat/Bowen Basins Gippsland Basin Exploration Development Production Gunnedah Basin South Sumatra Bay of Bengal McArthur Basin
  3. 3. Santos’ onshore NT footprint A critical region for Santos, now and into the future Amadeus Basin  Farm-in compliments existing Mereenie oil and gas field  Seismic and drilling program underway McArthur Basin  Liquids-rich shale play  Drilling in June Mereenie  Operator since 1993  25 employees at site  Producing 600 barrels per day  Appraisal and development program underway
  4. 4. Natural Gas • All natural gas (conventional or unconventional) is predominately methane • Differentiator is the rock the gas is trapped in and the process required to produce it Conventional Gas or Unconventional Gas
  5. 5. Petroleum Operations Overview Exploration - Seismic Exploration / Development - Drilling Production
  6. 6. Well Construction / Integrity Wells are designed to completely isolate all aquifers • Drilling stops at regular intervals so that purpose-built steel pipes – or casing – can be installed • Several layers of protective cement and steel casing separate the operations within the well from formations and aquifers • Specially formulated cement mixture. • Casing is pressure tested above operating pressures to ensure well integrity • Wellbore design, construction and operations regulated in the NT • Regulators are kept fully informed on well bore integrity • Integrity of each casing and cement stage is verified prior to next operation
  7. 7. Fracture Stimulation • Accelerates the release of oil and gas • A fluid mixture of 99% water and sand plus a very small amount of chemicals is pumped down the well bore at controlled pressure to open passageways into the rock • The fluid carries the fine sand into the cracks, and the sand props the cracks open, allowing hydrocarbons to flow back into the well bore • Has previously been used in the Territory and extensively around Australia and the world for decades • All fracture stimulation activities will comply with NT Government regulations What is it? Process used to enhance the productivity of a well
  8. 8. Water Management Drilling • On average up to 1 ML of water is used for each well drilled. Fracture Stimulation • Up to 20 ML of water is used to fracture stimulate the well • Depends on number of stages • Vertical wells up to 10 stages / Horizontal wells up to 30 stages Sources of Water • This water is sourced from existing local bores, and captured rainfall and recycled where practical. • Does not need to be potable • Wells are lined with steel casing and cement to isolate and protect aquifers • Fluid flowback is captured into containment tanks / lined pits • Fluids disposed of under approved Govt approvals Baseline Assessment Plans • include registered bore testing programs to establish baseline information about groundwater including; • water levels, total dissolved solids and general water quality. Water used in well construction – drilling and fracture stimulation
  9. 9. Well Construction Drilling / Fracture Stimulation • Potential water impacts from well construction activities • Spills and leaks at surface • Migration • Mechanical failure of well • Gas zone is separated from aquifers by thousands of metres of impermeable rock, creating a natural barrier and preventing gas or fluids migrating into aquifers • Integrity of well minimises risks along with operational safeguards during fracturing process Potential Water Impacts – Risk Management
  10. 10. Well De-commissioning • Once well is no longer economic to produce it needs to de-commissioned • Cement plugs placed to isolate and protect aquifers from depleted hydrocarbon zones • Placement and verification of plugs is critical step • Well head cut off below ground level, cement cap • Well cellar is backfilled • Area around well, the lease and roads into the lease are then rehabilitated • Top soil is replaced and recovery of site is monitored until landholder agrees restoration is satisfactory • End goal is that site is restored to natural state • Each well abandonment must be approved by the DME and must comply with government regulations Falcon Shenandoah 1 well design and plug placement Permanent isolation and protection of aquifers and groundwater
  11. 11. Santos Operations in the Northern Territory • Production of oil and gas from Mereenie field in Amadeus Basin • Gas production to date approx. 250 bcf • Exploration efforts underway • Mereenie – tight sandstone / shale • Sth Amadeus – sandstone • McArthur – shale • Highly prospective - multi TCF potential • Commercialisation routes • Domestic • Export through Darwin • Export through pipeline link to East Coast Gas Production from Mereenie field, highly prospective exploration in McArthur and Amadeus Basins |
  12. 12. McArthur Basin - Tanumbirini-1 • Drill date: • June 2014 • TD ~ 4000m / 75 day well • Targeting Velkerri & Kyalla shales • Basin & Play opener › Testing the most thermally-mature, more gas-prone region of OT Downs Sub-Basin › Targeting the basin centre for maximum overpressure in mid-Velkerri, and oil to wet gas in Kyalla shales › Designed to intersect full shale section of ~2,400m thickness, from Top Kyalla Shale to Base Velkerri shale › Data acquisition is critical, with multiple cores and shale specific logging to understand shale parameters › Including surface hole information • To be cased for fracture stimulation in 2015 Unconventional Shale Gas & Oil Exploration Deep basin centre test, drilling Q3 2014 Tanumbirini 1 location 12 |
  13. 13. Southern Amadeus • Santos has a significant acreage position in the Southern Amadeus. • Santos is earning up to 70% equity in these permits via farmin with Central Petroleum • Initially targeting large conventional target structures in the sub-salt play • Mt Kitty discovery in April • Fractures are present which may enhance productivity • Helium-rich gas may be characteristic of the sub-salt play • Further evaluation being done • Working up other leads from regional seismic taken in 2013 Regional significance – Sth Amadeus 13 | Double Garden Lead
  14. 14. Operations - Interaction with Stakeholders Traditional Owners • Engagement with CLC and NLC Local Employment • 2013 Seismic surveys provided employment opportunities • Further opportunities are anticipated on future seismic and drilling operations and associated activities in the Northern Territory • including engaging local / Indigenous contracting companies where possible and Santos seismic contractor Terrex re-engaging local employees on future seismic campaigns Pastoralists / landholders • Southern Amadeus regional seismic survey spanned multiple properties, with landholders approving access for seismic and drilling activities • McArthur seismic survey also covered multiple properties, with the landholders granting access for both seismic and drilling operations Establishing successful working relationships with traditional owners, landholders and providing local employment opportunities with exploration operational activity 14 |
  15. 15. Conclusions Operations Santos is dedicated to ensuring safe and sustainable operations, including close community engagement, in the ongoing exploration of frontier petroleum plays in Amadeus and McArthur Basins in the Northern Territory Amadeus Basin Confidence in our petroleum prospectivity models - all elements are present: charge, structure, seals, potential reservoirs Next step is to complete the drilling of the Mt Kitty well, and delineate leads and play concepts that have emerged from the 2013 regional seismic for future drilling McArthur Basin New seismic has proven the extension of the Beetaloo Sub- Basin eastwards Prospective Kyalla and Velkerri shales will be targeted with drilling in June 15 | NT is highly prospective for onshore gas – watch this space!
  16. 16. Insert picture Thank You 16 GLNG Site on Curtis Island

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