Annual Report 200420
On top of exploration and new
ventures growth opportunities,
Santos has a large inventory of
gas fields that are yet to be
committed to gas contracts.
These fields, known as contingent
resources, represent significant
opportunities for Santos. 
Each year Santos works towards
commercialising these fields by
finding new gas contracts or
extending existing contracts 
so that they can be booked as
Proven (1P) or Proven plus
Probable (2P) reserves.
Santos’ contingent gas resources
are largely located offshore
southern Australia and Western
Australia, in the Bonaparte Basin
offshore northern Australia and
onshore Papua New Guinea. 
Santos continued to deliver on
gas commercialisation during
2004, commercialising 27 million
boe during the year. Santos also
achieved positive contract price
reviews for gas sales that were
well above the indexed levels.
UNIQUE ENERGY HUBS DELIVER
GAS SWAPS
Some of the most important gas
commercialisation achievements
for the year were the innovative
gas swaps agreements that were
only possible because of Santos’
unique spread of assets across key
Australian gas hubs.
Santos and the other South 
West Queensland Gas Producers
announced a coal seam methane
gas swap in May to allow each
party to supply the other party’s
contractual obligations in
different states via the Moomba
gas hub in central Australia. This
arrangement for 200 PJ meant
that Origin could avoid building 
a pipeline and that Santos could
capture a share of the saving.
Gas swapping will commence in
2005 and could continue until the
end of 2011.
A second gas swap, from eastern
Queensland to Gippsland, moved
gas through three states and five
joint ventures, expanding market
horizons for partners and
providing backup options 
to customers.
EXPANDED CASINO CONTRACT
ENHANCES VALUE
The commercialisation of the
Casino gas field in the Otway
Basin, offshore southern Australia,
continued during 2004 with an
increase in the quantity of gas
being sold under the initial term
sheet signed in September 2003
with TXU for 293 PJ. 
When the project was sanctioned
in October 2004, the joint venture
announced an extension to the
original Gas Sales Agreement to
supply up to 420 PJ of gas, and
possibly another 105 PJ, over 12
years for the Victorian or South
Australian markets.
The Casino contracts are unique
in that the reserves have been
contracted prior to the field being
fully appraised to confirm the
quantity of gas available. This 
has allowed the joint venture 
to undertake appraisal drilling
and near field exploration
programs with the knowledge 
that  all of the gas likely to be
discovered will be taken, thereby
significantly reducing the risk.
This shortens the time from
discovery to production and
delivers profits to Santos and 
its shareholders sooner.
WA CONTRACTS FAST-TRACK
JOHN BROOKES
Santos and its co-venturer
Apache won two significant gas
contracts in Western Australia
which resulted in the fast
tracking and sanctioning of the
John Brookes gas field in the
Carnarvon Basin.
The successful appraisal of the
field in late 2003 and early 2004
significantly increased the
available gas reserves. The
decision to bring the field into
production by mid-2005 enabled
active marketing of gas above
that already allocated to support
the declining East Spar field. 
In a separate move, designed to
enhance future commercialisation
opportunities, the joint venture
equity interests in the East Spar
and the John Brookes fields were
aligned through an acquisition
program which created an
important production hub 
at Varanus Island.
John Brookes has an expected
field life of more than 15 years
which could be further extended
by a development of the Reindeer
field in later years.
In the first contract, the joint
venture agreed to supply
Newcrest Mining with 120 PJ of
gas over 15 years at a maximum
rate of 25 TJ per day. Newcrest
will use the gas for power
generation at the Telfer gold 
mine in the Pilbara region of
Western Australia.