Case Study – Santos GLNG

Materials Management By the Numbers

The SANTOS GLNG Project represents a standout example of strategic materials management in one of Australia’s most ambitious coal seam gas (CSG) developments.

TOTAL Cost as a % of Project Cost <0.75%

This is significantly below the industry benchmark of 2-5% of capital cost according to Boston Consulting Group

As part of the broader Gladstone Liquefied Natural Gas (GLNG) initiative, this upstream phase involved developing extensive field gathering infrastructure across the Surat and Bowen Basins to collect and transport gas from thousands of wells to compression hubs and onward transmission pipelines.

Challenge: In large-scale oil and gas field developments like GLNG, materials management often faces hurdles such as volatile demand from construction schedules, remote site logistics, quality compliance for high-pressure and corrosion-resistant components, supply chain delays, and the need to balance cost control with safety and regulatory standards. Ensuring seamless availability of critical items—pipes, fittings, valves, and specialized gathering line materials—while minimizing downtime, excess inventory, and waste was essential to keep the project on track amid variable field conditions, weather impacts, and scope adjustments. Compounding these issues, Santos was under intense cost pressures from 2014 to 2018, driven by massive capital outlays on the GLNG project, significant cost overruns with their primary EPCM contractor (leading to a prolonged multi-billion-dollar dispute), and the global oil price crash that eroded revenues and necessitated aggressive debt reduction and efficiency measures.

Solution: Amid these financial strains, Santos sought innovative, agile partners to optimize their operations rather than relying solely on established giants like Oracle or SAP for materials management systems. Recognizing the need for cost-effective, tailored solutions during this high-pressure period, they took a calculated risk by engaging an emerging specialist firm—our company—to handle the materials management scope for the field gathering project. This partnership leveraged our nimble approach, cutting-edge inventory forecasting tools, and deep expertise in energy sector logistics, delivering a customized strategy that emphasized foresight, collaboration, and efficiency.

Key elements included:

• Thorough upfront inventory assessments to catalog and prioritize essential materials, including high-density polyethylene (HDPE) gathering lines, steel transmission components, and associated fittings designed for durability in CSG environments.
• Continuous stock monitoring and forecasting to anticipate needs, enabling timely procurement from vetted suppliers and preventing shortages during peak construction phases.
• Strong logistics coordination, encompassing real-time delivery tracking, rigorous incoming inspections for specification compliance, and swift resolution of issues like transport delays or material defects.
• Optimized onsite warehousing and storage practices to enhance organization, reduce handling waste, and ensure rapid access for field teams installing gathering networks.
• Close alignment between materials, engineering, and construction groups to synchronize availability with installation timelines, effectively mitigating disruptions from external factors.
• Rigorous adherence to safety, environmental, and regulatory requirements, including secure handling of materials, full chain-of-custody documentation, and periodic audits for traceability.

Additionally, cost-conscious strategies—such as bulk purchasing negotiations and alternative sourcing evaluations—helped maintain budget discipline without sacrificing quality or project integrity, aligning perfectly with Santos’ need for rapid, high-impact cost savings during their recovery phase.

Results: This disciplined materials management strategy delivered measurable benefits, including consistent material flow that supported uninterrupted progress across the field gathering network. By reducing downtime associated with material unavailability, the approach contributed to overall schedule reliability and operational efficiency in a complex, multi-site environment. It also reinforced compliance and risk mitigation, underscoring a commitment to sustainable and responsible resource development. The decision to partner with an emerging player like ours proved transformative, yielding awesome results that exceeded expectations—proving that innovative, boutique solutions can outperform traditional big-player systems in high-stakes scenarios. This collaboration not only helped Santos navigate their 2014-2018 pressures but also set a new standard for agile materials management in the energy industry.The SANTOS GLNG field gathering project demonstrates how robust materials management can transform potential supply chain vulnerabilities into a competitive advantage, enabling large-scale energy infrastructure delivery on time and within expectations. This case highlights best practices that continue to set benchmarks for upstream oil and gas projects worldwide, showcasing the power of strategic partnerships with forward-thinking firms.