BRISBANE – Australian oil and gas producers are looking to future gains from Carbon Capture and Storage (CCS) as industry races to meet global net zero emissions targets, even as the world’s largest CCS project in Australia struggles to achieve capacity.
Chevron Corporation’s A $ 3 billion ($ 2 billion) benefit from Gorgon Liquefied Natural Gas (LNG) to Western Australia has so far failed to meet its target, still burying half of the expected carbon dioxide (CO2) three years after its launch. . .
But at the annual gathering of the Australian petroleum industry this week, global leaders and independents said CCSE was the only proven technology to reduce emissions to the required level while maintaining a reliable and affordable supply.
While Chevron and its partners, such as Exxon Mobil Corporation and Shell Gorgan, work to bring CCS up to scale, others see the technology as an opportunity to make money, not just to offset their own emissions.
Santos Limited is investing $ 165 million in Australia’s second largest CCS project, the Mumbai Development, to store 1.7 million tonnes of CO2 a year using the depleted outback gas tank.
It seeks to turn the oil and gas field in the Timur Sea into a CCS hub and has booked 100 million tonnes of carbon storage resources in South Australia.
“I think it’s really exciting, because I believe CO2 is going to be the fastest growing product in the world,” Kevin Gallagher, chief executive of Santos, told a conference of the Australian Petroleum Production and Exploration Association (APPEA).
The industry seeks to save emissions from other industries in Australia and for LNG customers in Japan and South Korea, where there is no carbon sequestration resources or vast tracts of land for nature-based carbon offsets.
Japan’s Inpex Corp is considering using the proposed Bayu-Undan hub for CO2 from Darwin’s Ichthys LNG plant and is considering developing its own CCS project on 270 kilometers (170 miles) of water northwest of Darwin, Inpex vice president Bill Townsend Royter said.
“Decarbonizing is not an existential threat to our industry,” he said.
The International Energy Agency’s net zero situation says 7.6 billion tons of carbon emissions should be saved by 2050, or 200 times more than is currently being stored in 30 CCS projects worldwide.
“As our customers in Asia have looked to Australia for energy security over the past half century, they are now looking to us to help reduce their emissions as they work towards the Net Zero target,” said APPEA Chair Ian Davis.
Still, the technology faces geological, regulatory and commercial hurdles, Wood Mackenzie analysts say.
Wood Mackenzie analyst Angus Rogers says a lot of geological work is needed to understand how a CO2 plume passes through an aquifer or reservoir for each project.
The Australian government last year allowed CCS projects to create Australian carbon credit units, helping to make the projects commercially viable.
But Roger warned that the global rush for new developments could be a backfire, as companies compete for skills and resources as well as cost rockets.
“All of these projects are happening at the same time – they want to be launched by 2030. It can’t happen,” he said.
(1 = 1.4211 Australian dollars) (Reporting by Sonali Paul; Editing by Richard Pulin)