Santos Ltd. Business Information, Profile, and History
91 King William Street
VISION: Santos has a vision that by the end of the decade it will become the leading energy company in South East Asia with a share price that continues to grow and a reputation for sustainability in its operations. Santos' vision of future success is to be a safe, low cost, fast-moving explorer and producer and an agile niche player with a well developed ability to manage relationships with employees, partners and other stakeholders.
As the Company grows, it will provide a working environment that encourages innovation across the business and where employees are engaged in something which is tangibly more than just a job.
History of Santos Ltd.
Santos Ltd. is one of Australia's leading and fastest-growing oil and gas exploration and production companies. The Adelaide-based company operates throughout most of Australia, with extensive exploration licenses, and a major share in the Cooper Basin oil fields in central Australia. In the 2000s, Santos launched an ambitious international expansion program, adding operations and shareholdings in markets including the United States (where the company owns Tipperary Corp. and Esenjay Corp.), Indonesia, Egypt, Papua New Guinea, and Kyrgyzstan.
The company's holdings include the Australia Timor-Leste Joint Petroleum Development Area; offshore gas fields in the Carnarvon Basin in Western Australia; the Oyong and Maleo projects in East Java, as well as the Casino offshore field in Victoria. Santos is one of Australia's leading natural gas producers and suppliers, serving all major markets in Australia. The company also supplies oil and other petroleum- and gas-based liquids to the national and international market, and is a leading supplier of ethane to Sydney. The company's total production in 2005 topped 56 mmboe (million barrels of oil equivalent). Santos is listed on the Australian Stock Exchange and is led by Chairman Stephen Gerlach and Managing Director John Ellice-Flint. In 2005, the company's revenues neared AUD 2.5 billion ($1.9 billion).
Post-World War II Australian Exploration Effort
Australia launched a national effort to develop its own oil reserves in the years immediately following World War II. Oil exploration first began in 1946 and continued into the next decade. The discovery of oil deposits at Rough Range, near Exemouth in Western Australia in 1953 sparked a wave of enthusiasm throughout Australia. The prospect of reducing the country's reliance on imported fuel, as well as the huge potential for profit, encouraged a number of major oil players, including Esso and BHP, to enter the Australian oil market in that decade. Yet there was also a homegrown effort to develop a national oil industry.
South Australia had been the subject of some controversy over its potential for profitable oil deposits. Indeed, the Australian government's official position held against the possibility of oil reserves in the region. Nonetheless, a number of others considered it to be the area of the country with the most potential for oil deposits.
Among them was Robert Bristow, who, joined by friend John Bonython, had begun researching the region in the early 1950s. In 1954, Bristow applied for one of the oil exploration licenses (OEL) being awarded by the Australian government. Bristow was originally granted the OEL 7, an area that encompassed more than 312,000 square kilometers. By the end of the year, Bristow and Bonython had acquired the adjoining OEL 6, which included the northeast tip of the region, and added almost 200,000 square kilometers more. Both OELs were transferred to a new company set up by Bristow and Bonython in 1954, called South Australian Northern Territory Oil Search, or Santos for short. Bonython was then named chairman of the new company.
Santos went public in February 1955 as it launched its oil exploration operations. The company at first explored the area north of Port Augusta, and drilled its first 24 holes in the Wilkatana region that same year. While those holes did not reveal any oil, the operation received a great deal of publicity and sparked the interest of Premier Thomas Playford IV. Through Playford's influence, the Australian government reversed its stance on the South Australian oil exploration effort, which brought over noted American petroleum geologist Dr. A. I. Levorsen to assist the company. Levorsen encouraged Santos to drill still further to the northeast. Levorsen also recognized that Santos lacked the resources, both financially and in terms of experience, to carry out exploration operations in an area roughly the size of the state of Texas. Levorsen, therefore, helped Santos arrange a partnership with Dallas, Texas' Delhi-Taylor Oil Corporation (later known as Delhi International).
With Delhi's backing, Santos at first began drilling at Oodnadatta in 1957. By the following year, however, Santos had begun putting into place the infrastructure to drill at Innamincka. In 1959, Santos completed its first deep well there. This and additional wells drilled at the site were unable to locate commercially viable quantities of oil. Nonetheless, the drilling efforts revealed encouraging geological evidence for the existence of strong oil and gas deposits in the region. As a result, the region attracted a new wave of investment interest, not only for its potential oil and gas reserves, but also for its important mineral deposits. Santos also benefited from the interest in the region, when French Petroleum Company, a subsidiary of France's Total, invested some AUD 800,000 in the company, becoming one of its major shareholders.
Into the early 1960s, the Delhi-Santos exploration efforts had begun to focus on the Cooper Basin. This focus paid off in 1963, when the company discovered a major natural gas deposit at the second well drilled at Gidgealpa. That deposit became the company's first commercially viable well, with a flow rate of 3.2 million cubic feet per day.
Delhi and Santos continued to explore the Cooper Basin and, by 1965, the partners had discovered a new major natural gas deposit, at Moomba. By 1966, the company had begun to exploit the Moomba reserve. Combined with the natural gas available at Gidgealpa, Santos was not capable of meeting the demand for all of South Australia. The company then signed a supply contract with the South Australian Gas Company, owned by the state government, and launched construction of a pipeline to connect the Cooper Basin with Adelaide. The pipeline, nearly 800 kilometers long, was completed in 1969. By then, the company also had begun construction on its own gas processing plant at the Moomba site.
Building Gas Reserves in the Late 20th Century
Santos's continuing exploration operations brought it to Tirrawarra in 1970. There the company not only discovered gas reserves of some 7.8 million cubic meters per day, but also its first petroleum deposit, flowing at 650 barrels per day. Santos also picked up new customers into the early 1970s, adding the Electricity Trust of South Australia in 1969, then signing a contract to supply the Australian Gas Light Company in New South Wales in 1971. In support of that contract, the company built a new pipeline connecting its sites to New South Wales. That pipeline was completed in 1976.
By then, the company had made another major new gas discovery, in the Ergomanga Basin north of Cooper Basin. Then, in 1977, Santos and partners drilled a new well in the Ergomanga Basin at Poolowanna, in the Simpson Desert, producing the first oil in that area. That well was quickly followed by Strzelecki 3, the first significant discovery of oil in Ergomanga, with a production of more than 2,400 barrels per day.
Santos and Delhi agreed to a breakup of their partnership in 1979, with Delhi taking over exploration operations in the Cooper Basin, while Santos became responsible for the production and further development of the area's gas and oil fields. At the same time, Santos joined another partnership, the Cooper Basin Liquids Project, which called for the construction of an AUD 1.5 billion condensate production facility, pipeline, and port facility. Launched in 1981, initial shipments of condensates began in early 1983, followed by crude oil that same year; by 1985, the facility also had begun shipments of LPG as well.
Santos also began looking beyond the South Australia region. In 1984, the company acquired two other companies, Reef Oil, and Alliance Oil Development. The latter had been active in the Otway Basin region, at Australia's southern tip. By then, too, Santos had completed a new pipeline, the Jackson-Moonie pipeline, giving it access to the port of Brisbane. The pipeline enabled Santos to begin its first export shipments, of LPG to Japan, in 1984.
Other acquisitions followed through the 1980s. These included a majority stake in Vamgas, which had been active in the Cooper Basin region since the 1960s. The company also acquired a majority of Latec Investments, active in the Amadeus Basin in the Northern Territory, as well as the holdings of Total and Western Mining Corporation in the Cooper Bay and Ergomanga Basin areas in 1987. That same year, Santos's importance in the Australian petroleum market was underscored when the company was placed in charge of the production and development of Queensland oil and gas market.
By the end of the decade, Santos had begun taking its first step into the international market. In 1988, the company bought Peko Oil, a company with holdings in the Timor Sea, as well as in the United Kingdom and United States. That acquisition also brought Santos its first offshore operations. A second purchase, of holdings of Elf Aquitaine Exploration Australia, further boosted Santos's presence both in the Timor Sea and in the Bonaparte Basin region. By 1989, the company had made a new major oil field discovery, at Talbot 1 in the Timor Sea. That site boasted a production of 4,900 barrels per day. At the same time, the company launched production at the Challis field in the Timor Sea.
By the end of the decade, Santos had made a new gas field discovery, at Elevala in Papua New Guinea. In that same year, Santos brought its first offshore facility online, at Talisman Oil Field in the Carnarvon Basin near the coast of Western Australia.
International Focus for the New Century
Santos maintained an active acquisition strategy through the 1990s as it solidified its position as a leader in the Australian petroleum and gas sectors. The company extended its reach into Queensland with the completion of a new raw gas pipeline between Moomba and Ballera in 1992. The following year, the company acquired the production assets of the Australian Gas Light Company, which included fields in Surat Basin, the Timor Gap, and elsewhere. In 1996, Santos added two more companies, Parket and Parsley Australasia, and MIM Petroleum, adding exploration and production operations in Surat Basin, Cooper, and Ergomanga, and offshore sites in Papua New Guinea, Indonesia, and Western Australia. By 1999, the company had added operations in Victoria, with the purchase of shares of a site in Otway Basin and an offshore site in Gippsland Basin. In that year, the company also bought a 25 percent stake in a gas field in Papua New Guinea.
Through this period, the company also continued its organic growth. In 1993, the company became the major backer of the discovery effort behind the Stag 1 oil field in Carnarvon Basin. The following year, the company added two new oil field discoveries, at Elang and Kakatua in the Timor Sea. In 1995, the company boosted its gas and condensate holdings with the discovery of the Undan field in the Timor Gap.
As the new century approached, Santos adopted a new strategy of building itself into one of the leading energy groups in the southeast Asian region. As part of this strategy, the company sought not only to solidify its position in Australia, but to expand its operations more deeply into the international markets.
The company launched this new effort in 2000 with the purchase of Shell Australia's Carnarvon Basin assets. This acquisition was followed with the purchase of a 40 percent stake in the Evans Shoal gas field in 2001. The following year, the company gained a significant presence in the United States when it purchased Esenjay Exploration, formerly known as Frontier Natural Gas Corp. At the end of 2005, the company's U.S. operations grew again with the acquisition of Tipperary Corporation, which, in addition to exploration operations in Colorado and Nebraska, also brought Santos strong operations in the Queensland, Australia coalseam and gas markets.
By then, Santos also had stepped up its exploration activities in Indonesia and, since 2004, had launched exploration operations in the Gulf of Suez in Egypt as well. In continued extensions of the company's business, Santos entered the Kyrgyzstan exploration market in 2005, then bought into Premier Oil's offshore exploration holdings in Vietnam in early 2006. Santos appeared well on its way to achieving its goal of becoming a southeast Asian energy leader for the new century.
Alliance Petroleum Australia Pty Ltd.; Basin Oil Pty. Ltd.; Coveyork Pty. Ltd.; Farmout Drillers Pty. Ltd.; Kipper GS Pty. Ltd.; Santos Asia Pacific Pty. Ltd.; Santos International Holdings Pty. Ltd.; Santos Americas and Europe Corporation (U.S.A.); Santos USA Corporation; Santos International Operations Pty. Ltd.; Bonaparte Gas & Oil Pty. Limited; Tipperary Corporation (U.S.A.); TMOC Exploration Proprietary Limited.
BHP Billiton Group; Shell Australia Ltd.; ExxonMobil Australia Proprietary Ltd.; BP Australia Group Proprietary Ltd.; Wesfarmers Ltd.; Origin Energy Ltd.; The Australian Gas Light Co.; Woodside Petroleum Ltd.; ENERGEX Ltd.; Siemens Ltd.; Alinta Ltd.; BOC Ltd.; Clough Ltd.; Auscom Holdings Proprietary Ltd.; Integrated Group Ltd.
- Key Dates
- 1954 Robert Bristow and John Bonython lead in the formation of South Australia Northern Territory Oil Search (Santos) oil and gas exploration company.
- 1963 Santos makes its first major gas discovery at Gidgealpa, in Cooper Basin.
- 1970 Gas and oil deposits are discovered at Tirrawarra.
- 1977 The company discovers Strzelecki 3, the first significant discovery of oil in Ergomanga Basin, with a production of more than 2,400 barrels per day.
- 1989 Santos acquires Peko Oil, a company with holdings in the Timor Sea, as well as in the United Kingdom and United States.
- 2002 Esenjay Corporation in the United States is acquired.
- 2005 The company acquires Tipperary Corporation in the United States, a company with significant holdings in Queensland, Australia.
- 2006 Santos adopts a new strategy of becoming the leading southeast Asian energy company.
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