Santos operates 208 oil wells in the remote Cooper Basin in outback South Australia and South West Queensland. With poor infrastructure, the operation, maintenance and delivery of fuel is logistically complex and costly. Santos uses local diesel fuel generators to operate oil beam pumps to lift oil to the surface; these consume some 8.1 million litres of diesel that contribute to production emissions and could otherwise be sold to its customers.
To reduce CO2 emissions, costs and diesel consumption while increasing the reliability of beam pumps, a new team was formed comprising the Santos Energy Solutions team, Santos Procurement, and Operations, the team working with suppliers to develop an innovative Australian-first solution of installing solar cells and batteries to power the pumps.
The Santos team knew it needed an innovative approach to guide its choice of supplier, especially as it had no history of working with vendors in the solar market. After an initial strategy paper was signed off by senior management, a design competition was conducted, which called for innovation from suppliers. The team engaged 19 suppliers in the competition and received 16 responses. Five were shortlisted to tender for a ‘proof of concept’ oil well.
After this well had run flawlessly for four months, four suppliers provided a submission for a further trial to minimise Santos’ risk exposure, learn from the first well and increase competition on price. All delivered improved designs and an average 5% lower price.
After just five months, AGL, Kaefer Integrated Services and CD Power were awarded two trial wells.
Eight months on, one well has increased oil well availability and saved $32,900, and cut diesel fuel consumption from 26,000 litres to zero. That diesel can now be sold to customers. This includes removing any travel for diesel delivery since the solar/battery installation. Predicted savings are $10m when all wells are operational, and Santos has now announced a 56-well roll out. The project has also achieved favourable media coverage, enhancing its reputation.
This positive initiative has created strong collaboration between Santos’ Procurement and Energy Solutions teams, setting a new standard on how internal collaboration can achieve an Australian-first outcome. And now the teams can proudly celebrate industry recognition as the overall winner of the CIPS Australasia Awards. Congratulations.