Santos Gives Green Light to Cooper Basin Efficiency Initiative to Reduce Expenses

Santos Approves Major Upgrade for Moomba Central Fields

Santos has officially greenlit the Moomba Central Optimisation initiative in the Cooper Basin, aiming to upgrade existing facilities, lower operational expenses, and pave the way for increased output in the future.

Working in partnership with Beach Energy, Santos has committed to a three-year plan to enhance the Moomba Central Optimisation (MCO) project in South Australia's Cooper Basin. This effort will focus on removing bottlenecks in vital upstream systems, allowing for greater gas extraction from the Central Fields. The company has allocated $357 million for this venture, which aligns with its financial strategy of maintaining a free cash flow breakeven between $45 and $50 per barrel.

Infrastructure Modernization and Efficiency Gains

The MCO project will see the replacement of seven outdated gas-powered compressor stations with a single, modern electric compressor hub. Additional compression and power generation capabilities will also be installed at the Moomba Gas Plant. These upgrades are designed to boost operational reliability and increase the flow of gas from the region’s most productive areas.

Santos anticipates that these improvements will result in over $600 million in combined capital and operational savings throughout the lifespan of the Central Fields. The company also aims to cut production costs by as much as $3 per barrel of oil equivalent. The project is projected to achieve an internal rate of return above 15%, with a payback period estimated at around six years.

Unlocking Further Potential in the Cooper Basin

Beyond immediate financial benefits, the modernization is expected to unlock the full development capacity of the Central Fields, which hold more than half of the Cooper Basin’s remaining proven and probable reserves. Santos believes that the expanded development made possible by these infrastructure upgrades could yield returns of over 25%.

For more than 60 years, the Cooper Basin has played a vital role in Australia’s gas sector, supplying both South Australia and the eastern states. In recent times, operators have concentrated on extending the basin’s productive lifespan through modernization and more efficient field management, ensuring its continued contribution to national energy security.

Environmental and Strategic Benefits

The project is also expected to advance Santos’s emissions reduction goals. Transitioning from gas-driven to electric compression is projected to lower Scope 1 emissions by approximately 40,000 tonnes of CO₂ equivalent each year.

This investment coincides with Santos’s recent arrangement with the South Australian government to provide 20 petajoules of gas annually from 2030 to 2040 for the state’s Strategic Gas Reserve. Pending a final supply agreement, Santos plans to use prepayment funds from this deal to help finance the Moomba upgrade, further enhancing the project’s financial outlook.

Long-Term Strategy for Domestic Energy Supply

The MCO project reflects Santos’s broader approach of maximizing value from existing assets while ensuring a stable, long-term gas supply for Australia’s domestic market.

By Charles Kennedy for Oilprice.com