Santos boss Kevin Gallagher upbeat on future of Cooper Basin

South Australia’s Cooper Basin can deliver another 50 years-plus of resource riches in the form of natural gas, hydrogen and synthetic methane, Santos boss Kevin Gallagher says.

South Australia’s Cooper Basin, which since the 1960s has underpinned the economic prosperity of the state, can deliver another 50 years-plus of resource riches in the form of natural gas, hydrogen and synthetic methane, Santos managing director Kevin Gallagher says.

Mr Gallagher has this year been named by Adelaide’s The Advertiser newspaper as the most powerful person in the state.

Always a contender for the title, the recent news that rival energy firm Woodside Energy had approached Santos about merger talks bolstered his already strong case as leader of the largest firm in the state by a huge margin.

But now, with the long-term future of Santos in the hands of Mr Gallagher, the company’s board and ultimately its shareholders, his role could not be more vital.

And putting the merger talks to one side, Santos’s ambitions for the Cooper Basin, which has had its death knell sounded erroneously many times in recent years, are inarguably of vital ­importance to the state’s future as a green energy powerhouse.

Mr Gallagher is legally constrained around what he can say about the merger talks, which are in the early stages.

And he is self-effacing when it comes to the top accolade ­bestowed by The Advertiser, ­arguing that whoever ran Santos would naturally be near the top of the list.

But he’s more than eager to talk about the future of the Cooper Basin which, he recalls with wry amusement, he was offered a mere $1 for almost eight years ago by private equity investors looking to make a buck.

The vision of Santos, and Mr Gallagher, is much grander than their likely plans to wring the most out of the oil and gas assets in the Cooper before winding them up.

On the contrary, Santos has been busily striking agreements with domestic and international companies, designed to build the Cooper into a carbon capture and storage (CCS) hub, and a producer of e-methane, made from green hydrogen and carbon dioxide.

The first stage of Santos’s Moomba CCS project, which will inject carbon dioxide into depleted underground oil and gas reservoirs for permanent storage, is about 80 per cent complete and will come online next year.

The Moomba carbon capture and storage site under construction.

And just this week Santos announced a memorandum of understanding with Japan’s JX Nippon Oil and Gas Exploration Corporation, and Eneos Corporation, which envisages importing up to five million tonnes of carbon dioxide by 2030, rising to 10Mtpa by 2035 and 20Mtpa by 2040.

“This would potentially provide a large-scale source of CO2 to support Phase 2 of the Moomba CCS project and provide feedstock for future e-methane production,’’ Santos said.

“At the same time, this would put South Australia and Santos front and centre in helping Japan to decarbonise its economy.’’

Another agreement also announced this week sees Santos working with Japan’s Toho Gas to look at the potential of producing carbon-neutral e-methane in the Cooper, which complements earlier agreements with Tokyo Gas and Osaka Gas.

Mr Gallagher said the vision went well beyond simply storing carbon dioxide, but envisaged manufacturing e-methane – synthetic natural gas – by combining carbon dioxide and green hydrogen, which would be produced using renewable energy.

“If we progress to the next stage, this collaboration could ­potentially extend the life of the Cooper Basin for another 55 years, keeping it at the centre of a modern Australian energy industry and supporting hundreds of well-paying, skilled and secure jobs for another three generations and beyond,’’ Mr Gallagher said.

A gas flare burning at the Moomba gas plant, Cooper Basin. Picture: Whatnall Brooke

He said when he started at Santos almost eight years ago “people were saying (the Cooper’s) best years were behind it’’.

“I’m very proud of the work that everybody here at Santos has done over eight years to identify the CCS opportunity – which had been looked at before – and to continue to discover new resources across the Cooper Basin.’’

Mr Gallagher said there were a number of workers who had put in 40 years of service in the Cooper Basin, and the entire team was excited about the notion of it delivering for decades to come.

“To me, it’s very exciting that CCS gives us the opportunity in the Cooper Basin to help the world solve a problem that we’re all scrambling to solve, and that is to reduce CO2 emissions,’’ he said.

“Santos now has the opportunity to use those same reservoirs that we took the oil and gas out of over the last 40 years or so to permanently and safely store CO2 and help the world meet its decarbonisation goals.’’

Mr Gallagher said the beauty of producing e-methane was that it avoided the need to figure out how to transport hydrogen, which is expensive to transport in a liquefied form and cannot safely be carried in current gas pipelines.

By producing the hydrogen in place and transporting the carbon dioxide instead, a carbon-neutral gas could be made. To that end, Santos has struck an agreement with pipeline operator APA to collaborate on the ­potential development of carbon dioxide infra­structure across eastern Australia.

“The collaboration will include an assessment of CCS pipeline transport routes from key emission sources in Gladstone, Port Bonython and Greater Sydney to the Moomba CCS facility in the Cooper Basin,’’ Santos says.

Mr Gallagher said Santos believed it could make hydrogen competitively in the Cooper Basin.

Originally published as Santos boss Kevin Gallagher upbeat on future of Cooper Basin