BRISBANE – Australia’s huge liquefied natural gas (LNG) sector is betting its future on carbon capture and storage (CCS), a technology that is critical to decarbonization and proven.
Explaining to everyone else is going to be a difficult part, especially since the only large-scale project of its kind has not yet been a great success.
Decarbonization and net-zero emissions by 2050 were the main topics of this year’s gathering of companies that make Australia the world’s largest LNG exporter at this week’s Australian Petroleum Production and Exploration Association conference.
CCS has a weak public image, largely because it is seen as failing to deliver on its promises and is a costly solution to a problem that proponents of environmental and renewable energy believe can be better solved by eliminating the use of fossil fuels.
Most of the perceived failures stem from the inability of CCS to remove carbon when burning fossil fuels, especially in coal-fired power generation.
For several years the coal mining industry and the lobby have been demanding CCS as a solution that would allow them to operate in the long run.
That promise has never been fulfilled, and it will be extremely challenging to find a serious power industry player or analyst who sees a future in CCS for coal-fired power plants.
But Australia’s LNG industry, which competes with Qatar as the world’s largest exporter and increasingly with the United States, sees CCS as an effective way to decarbonize its upstream sector.
The plan is both simple and huge in its scope.
LNG producers will dramatically reduce their Scope 1 and 2 emissions by capturing carbon emissions produced by emissions and liquefaction processes and re-injecting depleted natural gas and oil into reservoirs.
Proponents of her case have been working to make the actual transcript of this statement available online.
While it is true that there are several CCS projects in the upstream oil and gas enterprise, it is a technology that seems ready to be deployed on a massive scale at a price that makes it economically viable.
The Chevron-operated Gorgon LNG plant in Western Australia produced much of the world’s largest CCS project.
The project aims to capture and store 4 million tons of carbon emissions per year, but it works slightly better than half of that in 2021, saving about 2.1 million tons.
It is Chevron’s achievement in an industry that has a reputation for being tough on issues, the company has acknowledged problems with Gorgon, effectively saying it has a steep learning curve and aims to reach its goals.
The key to Chevron’s struggle in Gorgon is not to prove that CCS is unusable in upstream oil and gas projects, but that there are technological challenges that make it difficult, and the technology is still in its infancy when it comes to deploying to a significant project. Scale.
Another large-scale CCS project in Australia is being undertaken by the country’s second-largest oil and gas producer Santos, which is building 1.7 million tonnes of CCS a year at Mumbai, a gas hub in the country’s remote hub.
Kevin Gallagher, chief executive of Santos, said at the APA event that CCS would have to save about 7.6 billion tons of carbon dioxide per year under the International Energy Agency’s Net-Zero Pathway, 200 times more than what is currently achieved.
It nicely determines the scale of the challenge, but it also raises questions about the cost of achieving this goal.
Effectively, the LNG industry needs to be able to generate carbon credits to justify CCS investments.
This could be seen as either a clever way to allow fossil fuels to exist in a carbon-limited world or as another handout from taxpayers in the fossil fuel industry.
But perhaps the main challenge for Australian LNG producers is overcoming the barrier to public skepticism over CCS, both its cost and effectiveness.
To do this, the industry needs to demonstrate that technology can be deployed on scale and speed, without evading taxpayers, and can make a real contribution to net-zero goals.
For the Australian LNG industry, placing CCS in front of and at the center of their social licenses to operate is a huge risk, but it will also be seen that it is largely in their own hands to operate.
(Edited by Christian Smollinger)