Santos JV Abandons Oz Project

Winchester joint venture, comprising Santos and Octanex, has decided not to lodge an application for retention lease in respect of the Winchester gas discovery in Western Australia, Octanex said June 27.  The petroleum exploration permit WA-323-P is in the fifth year and ends July 5, 2018.

This decision follows advice by the operator, Santos Offshore, that its efforts to identify a development concept likely to be commercial within a period of fifteen years have not been successful, Octanex said.

According to the company, the joint venture had intended to lodge an application for retention lease prior to expiry of WA-323-P. A declaration of a location over the Winchester gas accumulation was previously sought and obtained as a pre-requisite for applying for such a Retention Lease, Octanex said.

In order for a retention lease to be granted the block must contain petroleum and two other criteria must be satisfied; first that the recovery of the petroleum is not currently commercially viable and, secondly, that the recovery of the petroleum is likely to become commercially viable within fifteen years. The operator formed the view that efforts to demonstrate the future commercial viability test were not sustainable, Octanex stated.

Santos has a 75% interest in the joint venture while the rest is owned by Octanex.