Santos carbon capture project signs another regional customer

As Santos prepares to resume community consultations on its Barossa gas project, it has signed another customer up to its carbon capture plant.

Interest in Santos’ proposed carbon capture and storage project is growing, with a new non-binding agreement signed with East Timor’s national oil company Timor Gap on Monday.

The South Australian-based gas and petroleum giant is working with the CSIRO and stakeholders to develop a carbon capture and storage facility at Middle Arm, using the depleted Bayu-Undan gas field reservoirs about 300km offshore from Darwin.

It will involve replacing gas from the 20-year-old Bayu-Undan field with gas sourced from Barossa gas reserve also in the Timor Sea.

The Bayu-Undan carbon capture and storage facility will pump carbon produced at the Barossa field into the old Bayu-Undan’s field into its empty sub-sea reservoirs.

Santos’ Bayu-Undan field is expected to store tens-of-millions of tonnes of CO2. Picture: Conoco Phillips.

LNG from the Barossa field and other regional gas projects will be pumped into the Bayu Undan reservoirs at commercial rates.

Santos believes the facility when it’s operating will capture up to 10 million tonnes of carbon a year, or about 1.5 per cent of Australia’s annual emissions.

This is the fifth non-binding carbon capture deal signed with Santos to access the carbon and capture storage facility when it is operational.

Santos and East Timor’s memorandum of understanding includes an arrangement around sharing information about Bayu-Undan CCS and exploring potential partnership opportunities, including equity participation for Timor Gap in the Bayu-Undan CCS project.

Santos chief executive Kevin Gallagher said Bayu-Undan was well placed to provide future carbon management services to the Asia Pacific Region, in particular customers in Australia, Japan, Korea and across Asia as countries seek to decarbonise economies

Formerly ConocoPhillips Darwin LNG plant, now owned and operated by Santos. Supplied

“This could be an exciting new industry for East Timor, putting it at the leading edge of the global energy evolution and generating revenue, local jobs and business opportunities for the nation,” Mr Gallagher said.

“This MOU is yet another agreement highlighting the strong interest in carbon capture and storage, and its broad acceptance as a safe, proven technology that is absolutely critical to achieving the world’s climate goals.

“We look forward to working with Timor Gap and the East Timor and Australian governments to progress the necessary commercial, fiscal and legislative arrangements to support the development of the Bayu-Undan CCS project.”

Mr Gallagher said Bayu-Undan CCS would provide a cost-competitive carbon solution because of its large scale and ability to utilise existing pipelines and other infrastructure.

He said because the sub-sea storage reservoirs have previously held gas and condensate in place for tens of millions of years, they would provide safe and permanent CO2 storage.

Kevin Gallagher, Chief Executive Officer and Managing Director Santos Limited speaking at the APPEA 2023 in May. Picture: NCA NewsWire / Morgan Sette

As well as reducing the absolute emissions and emissions intensity of Australian and East Timor gas and LNG projects, it also means Australian and East Timor gas and LNG projects will have a competitive advantage, with the potential to offer abated gas as a premium product for customers.

Santos is expected to make a final investment decision for the Bayu-Undan CCS project in 2025.

The Bayu-Undan CCS project is part of Santos’ CCS strategy which includes the Moomba CCS project, now 70 per cent complete and on track to store up to 1.7 million tonnes of CO2 per year commencing in 2024.

Santos has a 43.4 per cent operated interest in Bayu-Undan.

The remaining interest is held by SK E&S (25 per cent), INPEX (11.4 per cent), Eni (11 per cent) and Tokyo Timor Sea Resources (9.2 per cent).

The announcement comes as Santos prepares to resume consultation with Tiwi Islanders over construction of subsea infrastructure as part of its Barossa gas project.

Meetings will be held at Milikapity sport and recreation centre on Tuesday and two at Mantiyupwi motel on Wednesday.