Santos Limited · ASX:STO
Santos — Melbourne Mining Club (February 2010)
29 slides from Santos's conference presentation, Feb 4, 2010
Slide 1: Powering Asia: The Role of Gas
Presentation to the Melbourne Mining Club POWERING ASIA: THE ROLE OF GAS David Knox Chief Executive Officer, Santos Limited Melbourne 4 FEBRUARY 2010 PAGE 1
Slide 2: Powering Asia: The Role of Gas
[Slide 1] Powering Asia: The Role of Gas Address to the Melbourne Mining Club David Knox, Chief Executive, Santos 4 February 2010 2 [Thank MC. Acknowledge guests.] Thrilled to be here today and pleased to be the first oil and gas man in seven years to address the club. At least I have long regarded
Slide 3: Asia is the Engine of Energy Growth
[Slide 2] Asia is the Engine of Energy Growth World World GDP World Primary Energy 10 Population 160 Consumption 800 9 140 700 8 Billions of People 120 Quadrillions BTU US$ bn ($2005) 7 600 100 6 500 5 Asia 80 400 Asia Asia 4 60 300 3 40 200 2 Rest of World Rest of World Rest of World 20 100 1 0 0 0
Slide 4: Gas Demand Growth Part of Asian Energy Mix
They will want heating, cooling, light and mobility. Those are the basics that we provide in the energy business, and in a world that’s growing, energy will continue to be in high demand. [Slide 3] Gas Demand Growth Part of Asian Energy Mix Non-OECD Asia Total Energy 250 Consumption by Fuel 200 Othe
Slide 5: The 'Lucky Country' Fuelling Asian Growth
But even that level of demand creates great opportunity for gas producers, with every 1% increase in gas’ share in the fuel mix in non-OECD Asia equating to 45 mtpa LNG in 2030. In an Australian context, that’s 3 Gorgons in the West, or 15 trains at Gladstone in the East! This assumes maintenance of
Slide 6: Top 20 World Oil Reserves
In the broader resources business, Australia really is the lucky country when it comes to fuelling this Asian economic growth. Our geographic proximity, political stability, abundant resources and track record of reliable delivery put us in an unrivalled position. As you know better than I, Australi
Slide 7: Top 20 World Gas Reserves
These reserves are found in a relatively small number of nations, with the top 20 countries holding 94% of the world’s proved oil reserves – and almost 60% in the top 5 Middle East countries alone. Australia’s proven oil reserves are ranked 27th in the world. [Slide 6] Top 20 World Gas Reserves Worl
Slide 8: The Changed World of IOCs
Although Australia’s gas reserves are ranked 14th in the world, this does not tell the whole story. We have seen significant growth from unconventional gas resources which are not yet proven. But first there is another important point to consider … [Slide 7] The Changed World of IOCs 1970 2009 NOC R
Slide 9: Top 20 World Gas Reserves
This access has declined with the rising dominance of the state-owned National Oil Companies … and in 2009 only 8% of the world’s oil and gas reserves were fully accessible to IOCs. This is one of the factors that explains why Australia is increasingly attractive to international oil companies. Othe
Slide 10: Top Gas Reserves With Full IOC Access
Top 20 Gas Reserves With Full IOC Access Canada 58 USA 238 580 Proven gas reserves (Tcf) 89 250+ Unconventional Gas (Tcf), resource estimate Australia 8 Journal, PFC Energy “Full IOC Access” countries Source: BP Statistical Review 2009, Oil & Gas Journal North America and Australia stand out among m
Slide 11: What is Coal Seam Gas?
[Slide 9] What is Coal Seam Gas? Definition Methane that exists within coal Typically 98% methane, <2% inert gas, Gladstone no liquids, 1000 btu/scf heating value Denison Trough Bowen Basin Key Facts Fairview Scotia Roma Known coal exists from Townsville to Surat Brisbane Sydney (2000km) Basin Exist
Slide 12: Key Success Factors for CSG-to-LNG
I’ve spoken about the enormous potential for LNG in Asia and how unconventional gas can be used to supply it. I’d like to now have a closer look at how that vision can be achieved. [Slide 10] Key Success factors for CSG-to-LNG World class assets & reserves Manufacturing approach Gas storage manageme
Slide 13: World-class CSG Gas Reserves
To succeed, these projects must meet four key challenges: 1. First, accessing sufficient high-quality gas reserves to fuel these major projects 2. Secondly, adopting an approach to upstream gas production that enables efficient and economic drilling and operation of a large number of wells simultane
Slide 14: Australia's Abundant Gas Resources
While these challenges are significant, Santos is well positioned in all these areas … and I am committed to doing this all in a safe and environmentally responsible manner. To see how quickly unconventional gas resources can be developed we only have to compare the US and Australian experiences. In
Slide 15: Australia placed to supply domestic and export markets
Now a reminder of how well Australia is placed to provide domestic and export markets for decades to come. It’s important to note here that we are not strictly comparing apples with apples as 2P reserves and 2C resources are at different stages of development … but in the West and the East, there ar
Slide 16: Strong Asia Pacific LNG Demand Outlook
[Slide 13] Strong Asia Pacific LNG Demand Outlook 300 300 250 250 LNG Contracted Supply (mtpa) LNG Demand Russia East LNG Demand (mtpa) 200 200 Oman PNG Uncontracted Brunei 150 Demand 150 Others 100 Indonesia 100 Malaysia Qatar 50 50 Australia 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 Source:
Slide 17: Domestic Channel – Room to Grow
• And, the support of the Queensland Government. [Slide 14] Domestic Channel – Room to Grow Gas Penetration as % of Power Generated 100% 100% 90% 90% 80% 78% 80% 70% 68% 64% 70% 60% 54% 60% 50% 50% 50% 40% 35% 40% 37% 30% 30% 23% 20% 18% 20% 20% 12% 9% 8% 9% 9% 11% 10% 10% 5% 3% 0.5% 0% 0% Singapore
Slide 18: Room for gas to penetrate power markets
• For countries like Japan who import vast amounts of fuel to run their economies, a 20% penetration rate for gas seems a reasonable market share • So when you look at Australia at around 9%, India at 8% and China at less than 1%, one realises there is plenty of room for gas to penetrate the market,
Slide 19: South Australia leads in low emissions technology
[Slide 15] South Australia leads the country in low emissions technology, with gas providing 50% of power generation output and renewables, in this case wind, providing 17%. 34% of SA’s electricity is currently sourced from coal, produced by two ageing power stations in the State’s north. Should tho
Slide 20: South Australia's emissions intensity from power generation would halve
• South Australia’s emissions intensity from power generation would halve, dropping well below 0.4 tonnes of CO2 per MWh. • Similar reductions could be achieved right across the country if coal-fired power stations upon reaching their normal plant life were replaced with natural gas and a greater ro
Slide 21: Santos' Growth Strategy
[Slide 16] Santos’ Growth Strategy Santos is Australia's Leading Domestic Gas Producer (% of Domestic Gas Production) 18% 16% Performance from the Base 11% 11% 8% 7% Deliver LNG Growth 4% 4% 3% 3% Focused growth Chevron Conoco Phillips Santos ExxonMobil Origin Apache BP BHP Billiton Woodside Shell i
Slide 22: Santos' Growth Strategy
[Slide 17] Santos’ Growth Strategy Bonaparte LNG 2mtpa FLNG PNG LNG Santos 40% Sanctioned Dec 2009 Performance 6.6mtpa two trains from the Base Santos 13.5% Darwin LNG Production since 2006 3.6mtpa single train Deliver LNG Santos 11.4% Growth GLNG On track for FID mid-10 Focused growth 3.6mtpa first
Slide 23: The Project – Milestones Achieved
[Slide 18] The Project – Milestones Achieved GLNG is meeting key milestones Two trains, 5 train site Downstream FEED 90% complete Upstream FEED 75% complete Binding offtake agreement Supplementary EIS lodged - Public submission period closed Cultural heritage management Water solution - 900,000 tree
Slide 24: Environmental approvals and GLNG progress
We are setting the pace in terms of the environmental approvals process. Submissions closed on our supplementary EIS on Monday and we are the first project to reach that point. We are building our project team with over 400 staff now dedicated to GLNG – and we are continuing to create a job a day –
Slide 25: Australia Must Stay Competitive
[Slide 19] Australia Must Stay Competitive Australia must stay competitive to ensure our continued economic prosperity and to supply Asia’s economic growth To stay competitive, our world class resources sector requires: - Skilled labour - Stable fiscal regimes - Regulatory certainty Natural gas has
Slide 26: Labour costs, fiscal regimes and regulatory certainty
• Managing labour costs with multiple competing projects • Stable fiscal regimes are also essential to the continued development of our industry. Our message here is fairly simple – Don’t mess with success! We are all aware the Henry tax review is now being considered by Government. We would urge a
Slide 27: We have the energy.
[Slide 20] We have the energy. We have the energy. 2010 Santos Tour Down Under winner Andre Greipel /Photo by John Veage 20 At Santos we are excited about the future. It is simply a great time to be in the gas business and a great time to be CEO of Santos. As part the transformation of the company f
Slide 28: Glossary of Terms
Glossary of Terms Oil & Gas Units Other Abbreviations Bcf/day – Billion Cubic Feet per Day CBM – Coalbed methane Bcf/yr – Billion Cubic Feet per Year CSG – Coal Seam Gas bn bbl – Billion Barrels CCGT – Combined Cycle Gas Turbine btu/scf – British Thermal Units per (power plant) Standard Cubic Feet (
Slide 29: Disclaimer & Important Notice
Disclaimer & Important Notice This presentation contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which cou