Santos close to carbon capture at Moomba as revenue rises
Santos says its $335m Moomba carbon capture and storage project, which promises to help in the transition to a net zero economy, is in the final commissioning stage.
Santos says its $335m Moomba carbon capture and storage (CCS) project, which promises to help in the transition to a net-zero economy, has reached the final commissioning stage.
Announcing the company’s “strong” second-quarter results, Santos chief executive Kevin Gallagher said phase one of the project in South Australia’s Cooper Basin was 92 per cent complete, with connection to wells now in progress.
Santos says CCS, which captures carbon dioxide produced in gas production, processes it and safely injects it underground, is vital if the world wants to reach net zero emissions by 2050. The project will have capacity to store up to 1.7 million tonnes of CO2 per year.
Mr Gallagher said the project was an opportunity for Santos and South Australia to help the transition to a carbon-free world, as new fuels such as hydrogen became a reality.
He said the world would need fossil fuels “for as long as we can imagine’’, so the real challenge was removing carbon as a source of climate change.
Work was continuing on phase two of the project, with a focus on opportunities for Santos to provide carbon management services to customers and third parties.
Mr Gallagher said Santos had delivered another strong quarter of production and cashflow.
“First-half cashflow of almost $US1.1bn positions us well to fund shareholder returns and sustain our existing business,” Mr Gallagher said. “Our major projects continue to deliver to plan.”
Santos achieved sales revenue of $US1.3bn ($1.9bn) in the second quarter, consistent with the comparative prior-year period. Production had increased by 2 per cent, quarter on quarter, with second-quarter production of 22.2 million barrels of oil equivalent.
Santos said its Barossa gas project was 77 per cent complete, with the laying of pipe for the export pipeline finished and construction activities for the Darwin pipeline duplication begun. The project will provide a new source of gas to the existing Darwin liquefied natural gas facility in the Northern Territory. The Pikka oil project in Alaska was 56.2 per cent complete with 65km of pipeline completed. Pikka is one of the largest conventional oil discoveries in the US in the last 30 years.
“We can now see line of sight to our major projects progressively coming online, putting us in a strong position to deliver sustainable, competitive shareholder returns over the long term,” said Mr Gallagher. “Our focus for 2024 is on continuing to drive the disciplined low-cost operating model across the business and the execution of the Moomba, Barossa, and Pikka projects, whilst maintaining a strong balance sheet.”
Santos GLNG in Gladstone was supporting domestic gas supply, the company said, with commitments of 18PJ of gas sales planned to supply the domestic market in the second and third quarters this year.
Santos has been a frequent target of overseas investors given its exposure to LNG production, bolstered by the takeover of fellow gas exporter Oil Search.
The South Australian producer fielded a $13.5bn, $6.91 per share takeover bid from US-based Harbour Energy in 2018, which it knocked back.
Santos has since grown to a $24.9bn valuation, largely due its takeover of Oil Search in 2021. Earlier this year Santos and Woodside backed away from a merger worth a reported $80bn.
JPMorgan analysts Mark Busuttil and Nicholas Morgan said Santos’s second-quarter revenue was generally strong with total production exceeding its estimates by 3 per cent and revenue in line with the brokerage’s projections. Santos shares rose 0.4 per cent to $8.04 on Thursday.
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