Construction on Santos' GLNG project on Curtis Island is now more than 50% complete.
Construction on Santos' GLNG project on Curtis Island is now more than 50% complete. Santos

Year critical as GLNG build ramps up: Santos AGM

THIS year will be critical in terms of construction on Curtis Island's GLNG project, Santos chief executive David Knox told the company's annual general meeting on Thursday.

Mr Knox said GLNG was on track and now more than 50% complete.

"In the upstream, our drilling program is progressing well. We are adopting new technology through the use of multi-well pads," he said.

"This approach has allowed us to expose more coal per well, drill wells both faster and cheaper, and also reduce our surface footprint.

"We drilled 143 wells in 2012. In 2013, we expect to spud more than 200 wells.

"GLNG is also delivering on its strategy to execute the most efficient gas supply for the project by also sourcing gas from underground storage, supply from our own Santos portfolio and supply from third parties.

"Importantly, this gas is all available for delivery in 2015 onwards."

Mr Knox said in terms of construction, this year was critical - it was the year in which construction would peak, and as a result, more than 7000 people were working on the project.

"Approximately 1700 of those are now working on upstream construction," he said.

"Construction of the pipeline is also progressing. Around 220km has been cleared and graded, 180km of pipe strung and over 11,000 welds completed.

"Across the harbour on Curtis Island, construction continues to ramp up on the plant and port. The teams are rapidly moving from civil to mechanical works, with good progress being made on both trains, and the LNG tanks.

"The project is on track to deliver first LNG in 2015 as expected, and with that to begin to generate substantial cash flow."

A team of 12 people worked for about six weeks to assemble a 100m long, 277 tonne tunnel boring machine on-site for Santos GLNG.
A team of 12 people worked for about six weeks to assemble a 100m long, 277 tonne tunnel boring machine on-site for Santos GLNG. Emily Kemp

Retiring Santos chairman Peter Coates said the GLNG project was helping move the company closer to its vision of being a leading oil and gas exploration and production company in Australia and Asia.

"Asia's growth has seen a corresponding growth in energy demand. Recent estimates see global energy demand growing by more than a third between now and 2030," Mr Coates said.

"And almost all of that growth will come from emerging economies such as China and India.

"These changes in our region's demand for energy have provided Santos with the opportunity to transform itself, to become a significant oil and gas provider for both the Australian and Asian markets, in what is now clearly the Asian century.

"Clearly, the LNG export projects in Queensland are a material part of that increase in demand, but local demand is also growing amongst both households and business consumers."

Mr Coates said the main challenge facing the industryy was the regulatory uncertainty at state and federal level.

He said the industry faced substantial duplication of processes, uncertainty about further changes to the regulatory framework, and "not enough urgency on the part of governments to resolve these issues".

"The result is a complex mix of regulatory and policy hurdles, without the appropriate coordination to ensure that developments can be assessed efficiently and effectively," he said.

"We understand the need for government to ensure that industry operates safely and sustainably.

"However, it is equally important that developments proceed in a timely manner, if a secure supply of gas is to be maintained."

Mr Coates said the second challenge that must be addressed was Australia's cost competitiveness as a gas producing nation.

"Australia's gas industry is one that several other countries around the world aspire to. As Asia seeks to increase its security of supply it will look to diversify its supply sources," he said.

"The challenge for Australia's projects and for policy makers is to ensure that Australia remains cost competitive.

"This is the only way that further Australian projects can be sanctioned to meet both domestic and Asian demand. If we don't remain competitive, others will step in."

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