Santos has successfully stored carbon underground, and says it could be the start of a much bigger project
Santos has ticked off a key milestone in its bid to start a viable project in SA to capture and store carbon dioxide. Now it needs one more thing.
SA Business
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Santos says it has successfully injected 100 tonnes of carbon dioxide into depleted gas reservoirs in the Cooper Basin in a key milestone for its Moomba Carbon Capture and Storage (CCS) Project.
The Adelaide energy company is aiming to make a final investment decision on whether to go ahead with the project – which would create about 230 new jobs during construction – by the end of the year.
But any project would be dependent on some sort of government support in the form of carbon credits or a similar financial measure to make the plan viable, Santos says.
Prime Minister Scott Morrison announced a $1.9bn energy package in September that included a $50 million Carbon Capture Use and Storage Development Fund, to help the early-stage technology prove itself in the field.
Other competing sites for a CCS project include the Surat and Bowen basins in Queensland, waters off the Victorian coast, and the Browse and Carnarvon basins off the WA coast.
Santos says the Moomba project is the most advanced in the nation, and it has been working on a concept study for the project this year.
Santos managing director Kevin Gallagher has also said that CCS could be integral to making zero-emissions or “blue” hydrogen, which involves decarbonising natural gas at its source.
The Moomba CCS project aims to inject initially about 1.7 million tonnes of carbon dioxide into depleted gas reservoirs per year, which could ramp up to 20 million tonnes per year for up to five decades.
But on Thursday Mr Gallagher flagged again that on a stand-alone basis, CCS was not economically viable at the moment.
“We will need an approved methodology for CCS to be in place with the Clean Energy Regulator before we take a final investment decision on our Moomba CCS Project because carbon credits are essential to make it stack up economically with the cost of abatement still at around $30 per tonne,” Mr Gallagher said.
“Our aim is to drive these costs lower with scale and experience, but the first step is to generate carbon credits to enable initial development.
“We are growing production in the Cooper Basin again, and that, combined with the Moomba CCS Project, has the potential to make Moomba a vital supplier of clean energy for Australia for another 50 years, supporting thousands of skilled, secure, well-paying jobs and decarbonising energy at its source.
“Our Moomba CCS Project is one of the most globally competitive projects – it will be the second largest in the world and one of the lowest cost project at our current estimate of around A$30 per tonne.”
Santos also released its third quarter report on Thursday, posting record production of 25.1 million barrels of oil equivalent, 22 per cent up on the previous quarter.
The company’s gearing level was 33.6 per cent at the end of September and the company generated $US143 million in free cash flow, bringing free cash flow for the first nine months of the year to $US574 million.
“Our base business is strong with production levels expected to remain relatively steady for the next five or six years, allowing us to continue to progress our major capital projects while maintaining capital discipline and flexibility in commitment timing,’’ Mar Gallagher said.
“As COVID-19 and the lower oil price continue to challenge us, we have remained resilient with stable revenues and consistent free cash flow generation from the core assets. Our balance sheet is strong and we remain well positioned to leverage our growth opportunities when business conditions improve.”
Santos shares were 2.7 per cent lower at $5.04.
