Santos has made a recent investment decision on the Momba Central Refining Project in the Cooper Basin to modernize infrastructure, reduce costs and unlock future production growth.
With its joint venture partner, Beech Energy, Santos has approved the Momba Central Optimization (MCO) project in South Australia’s Cooper Basin, a three-year development commitment designed to shut down key upstream infrastructure and enable more gas production from the basin’s central fields. Santos will invest $357 million in the project, which it has fully budgeted and is consistent with its goal of breaking free cash flow of $45-50 per barrel.
The MCO project will replace seven old gas-fired compressor stations with a single electric-fired compressor station and install additional internal compression and power generation capacity at the Momba gas plant. By modernizing the infrastructure and streamlining operations, the company aims to improve reliability while enabling higher productivity from multiple production areas of the infrastructure.
Santos expects the upgrade to deliver more than $600 million in combined capital and operating cost savings over the life of the core sites on a net basis. The company is also targeting a drop in production costs of up to $3 per barrel of oil equivalent. According to Santos, the project has an internal rate of return above 15% with a payback period of about six years.
Beyond the immediate cost savings, the project is designed to unlock the full development potential of the core areas of the Cooper Basin, which account for half of the basin’s remaining proven and probable reserves. Santos estimates that wide-area expansion enabled by infrastructure upgrades could generate more than 25% of revenue.
The Cooper Basin has been a cornerstone of Australia’s gas industry for more than six decades, supplying the South Australian and Eastern Australian markets. In recent years, producers have focused on expanding the productive life of the basin through infrastructure upgrades and more efficient field development as the region plays a role in domestic energy security.
Santos said the project would also help efforts to reduce emissions. The switch to gas-powered electric compression is expected to reduce Scope 1 emissions by about 40,000 tonnes of carbon dioxide equivalent per year.
The investment comes in addition to the company’s recent agreement with the South Australian government to provide 20 petajoules of gas per year for the state’s strategic gas reserve from 2030 to 2040. In line with the latest gas supply agreement, Santos intends to use the prepayment funds from this arrangement to help finance the Momba reform project, further strengthening the economy.
