ConocoPhillips has made a natural gas discovery in the Otway Basin off the Australian coast, the company said today, adding that the exploited reserves and their commercial viability have not yet been estimated.
“The Essington-1 well is the first discovery in Otway since 2021 and is a promising start to ConocoPhillips’ exploration activities in the region. Initial results are encouraging and we look forward to continuing to drill our second exploration well in December,” said Conoco’s Australian operations president Jan-Arne Johansen.
ConocoPhillips has a 51% stake in the Otway Basin project, with partners including Korea National Petroleum Corporation and Australia’s 3DEnergi. The company joined the drilling project in 2019. Before that, it was a shareholder in Darwin LNG in northern Australia, but sold its stake there to local major Santos for $1.4 billion, also in 2019.
ConocoPhillips is the operator of Australia Pacific LNG, in partnership with Origin Energy and China’s CNOOC. The facility is the largest LNG production site in eastern Australia and produces around a third of the natural gas consumed in the region. However, due to a looming shortage, the project could be hit by mandates to secure domestic supply before exporting LNG, like other LNG producers in Australia.
Australia’s so-called National Gas Security Mechanism was supposed to ensure there was enough natural gas for local consumers, but so far it has caused more harm than good, according to some. Measures attempted so far have included forcing gas producers to reserve a certain amount of uncontracted gas for the domestic market and forcing LNG producers to deliver less gas to their customers and divert more of the product to the domestic market. According to the Australian Competition and Consumer Commission, “overall, they have not materially improved outcomes for gas users.”
By Irina Slav for Oilprice.com
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