Chevron vows to prove carbon caption, storage can help LNG’s emission reduction targets

Chevron’s Barrow Island carbon project currently receives 40 per cent of what it was projected to but the LNG giant is determined to prove it’s the answer to emissions reduction requirements.

Chevron has vowed to finally overcome the problems that have plagued the performance of its carbon capture and storage site on Barrow Island and restore the facility to its maximum capacity.

Barrow Island, a 202 sqm island off the Pilbara coast of Western Australia, was by now supposed to be the world’s largest carbon capture and storage site, capable of accepting four million tonnes of buried carbon dioxide each year.

But it has been beset by problems and currently stores about 1.6 million tonnes of carbon dioxide a year. This has required Chevron to cover the surplus by buying carbon credits to satisfy its obligations to operate on Barrow Island.

Rated as one of the most important wildlife refuges in the world, Barrow Island’s ecology is essentially intact. The sparsely vegetated arid landscape is a secure habitat for a variety of plants and animals – many of them endangered or rare on the mainland.

While the issues have been expensive for Chevron, environmentalists have seized on the perceived poorer results of the technology which affects public and government support.

Without the technology proving to be viable on a grand scale, Australia’s LNG industry will struggle to maintain the broad social licence it needs. If production growth slows, Asian customers – which have fewer opportunities to use renewable energy compared with Australia – will struggle to accelerate efforts to wean their economies off coal.

General manager of energy transition David Fallon has rejected the suggestion that carbon capture and storage does not work and said Chevron was confident of soon hitting its target of four million tonnes of stored carbon dioxide.

“This is not something that will happen today … I take exception to it being called a failure,” Mr Fallon said.

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An aerial view of Chevron's Gorgon LNG project off the WA coast.

What we are basically doing to fix the problem is renovating the wall wells out there to improve the flow that we are getting through them, to make them more resilient to the small amounts of sand that is produced.

“That will allow us to increase the water production rate and injection rate. As we do that, we will monitor what the reservoir is telling us and that will allow us to bring up the CO2.”

While the pledge to deliver will be warmly welcomed, Chevron has made similar commitments in the past and this has been seized upon by opponents as perceived inadequacies of the technology.

Seemingly cautious of committing to a hard timeline, Mr Fallon said Chevron was “focused on doing the work safely”.

However the success of Chevron will have ramifications for the broad industry. Australia’s LNG industry hopes carbon capture and storage is a viable option as it comes under sustained pressure from the federal government’s signature energy policy, the safeguard mechanism.

The strengthened safeguard mechanism – a scheme first introduced under the Coalition – requires Australia’s 215 largest polluters to cut their annual emissions by about 5 per cent every year, which they are initially achieving through the use of carbon emission credits.

Labor insists the mechanism will provide incentives for investments in technology that can curtail carbon dioxide output.

To meet its obligations and capitalise on expected demand, Santos is nearing the development of its $US165m ($231m) carbon capture and storage project at its Moomba site in South Australia’s far north. It has an expected capacity to store 1.7 million tonnes of CO2 a year.

If Santos proves it can successfully deliver the carbon capture and storage site, it is expected to encourage others follow suit.

But the federal government is increasingly sceptical and budget assistance has steadily ebbed; as a result the LNG industry wants financial support to bolster new developments.

Santos chief executive Kevin Gallagher said he did not believe the industry needed subsidies, although he would like some acceleration in securing permits needed for new developments.

Instead, Mr Gallagher said Australia had a comparable advantage.

Santos chief executive Kevin Gallagher.

“We have natural advantages in this part of the world, Mr Gallagher said. “I can’t think of any better way of storing carbon than putting it in the ground and locking it away.”

If Australia can finally demonstrate the viability of the technology, advocates say the potential is huge. Australia has substantial land where the geological conditions are ideal, and an expansion would allow the LNG industry to grow while also mitigating emissions.

Critics, however, insist the technology will undercut global efforts to bolster renewable energy generation output.

Proponents insist the technology could spur the development of hydrogen, a fuel source that many are extremely excited about.

Australia is widely seen as having natural advantages in the production of so-called green hydrogen, with its abundant land mass and plentiful amounts of sunlight to develop renewable energy that could be used to power the splitting of water into core elements.

Hydrogen requires substantial amounts of energy to create. So using renewable energy as the power source means so-called green hydrogen is still some years away from commercial viability.

Using gas to split water into its elements could spur the development of the industry which would be cheaper, while carbon capture and storage would mitigate the environmental toll.

Chevron president of international exploration and production Clay Neff said gas offered the most viable, immediate catalyst for hydrogen’s emergence.

“Carbon capture projects are very important, they are going to be key in converting gas into hydrogen,” Mr Neff said.

“There is an opportunity to speed up the new energies business with gas alongside carbon capture and storage.”

Unlike with carbon capture and storage, the federal government is enthusiastic about hydrogen. In the May budget, it announced plans to provide $13.7bn in tax credits for the production of green hydrogen and critical minerals processing – Australia’s answer to the US signature transition policy known as the Inflation Reduction Act.

The Hydrogen Production Tax Incentive will provide a $2 incentive per kilogram of renewable hydrogen produced for up to 10 years per project between 2027-28, and 2039-40 for projects which reach final investment decisions by 2030.

To prepare projects to become eligible for the tax credits, the government has extended its so-called hydrogen headstart program. Six projects, including developments from Origin Energy and BP, were in December 2023 short listed for $2bn of funding.

Originally published as Chevron vows to prove carbon caption, storage can help LNG’s emission reduction targets