Santos says the government’s hydrogen push is welcome, but CCS still needs carbon credits

Santos says its Moomba carbon capture and storage ties in with the Federal Government’s hydrogen ambitions, but again flagged the need for carbon credits.

Santos managing director Kevin Gallagher in a back up control room at their Adelaide headquarters.

Santos has lauded the Federal Government’s hydrogen and carbon capture plans as future job creators, but says it’s $210m Moomba carbon capture and storage project still needs an economic trigger to get it over the line.

Prime Minister Scott Morrison this week put more flesh on the bones of the government’s hydrogen and emissions abatement plans, saying four hydrogen hubs will be built across the nation under a $275.5m federal program.

Another $263.7m will be put towards projects including carbon capture and storage, which involves injecting carbon dioxide underground for permanent storage.

Whyalla has already been earmarked as a potential home for a hydrogen hub, while Santos says its Moomba CCS project in the state’s Far North is the nation’s most advanced.

Santos chief executive Kevin Gallagher said hydrogen and CCS policies could put the nation at the forefront of the global energy transformation which is underway.

But he again made the point that the Moomba project needed the right policy environment to be viable.

Santos’s Moomba has processing plant in Far North South Australia. Picture: Kelly Barnes

“At Santos, we’ve committed to net-zero by 2040,’’ Mr Gallagher said.

“I am looking forward to taking a final investment decision on our $210 million Moomba CCS project in the second half of this year as we deliver on our commitment to decarbonise our existing business and grow our clean fuels capability.

“We are technically ready, but an approved methodology for CCS projects to generate carbon credits is essential to make the project stack up economically, with the cost of abatement still at 25 to 30 Australian dollars per tonne.’’

Mr Gallagher said the initial CCS project would store up to 1.7 million tonnes of CO2 per year, support about 230 jobs during construction “and sustain thousands more over the project’s operational life’’.

“Developing projects such as Santos’ Moomba CCS proposal will allow us to decarbonise natural gas production and provide the fastest route to a hydrogen-fuelled economy.

“With South Australia’s Port Bonython in the running to be a national hydrogen export hub, Santos is already attracting strong interest from Japanese and Korean customers and investors who are looking to reduce emissions from coal-fired power stations using hydrogen and the possibility of shipping their CO2 to Australia for permanent storage.

“This is very exciting for Santos, which already has a well-established Japanese and Korean customer base through its LNG business and infrastructure at Moomba and Port Bonython that provides a strong competitive advantage, particularly when combined with world-class natural gas and solar resources, along with large-scale, low-cost CCS capability.’’

The Federal Government’s plans also include developing a new certification for Australian hydrogen.

The five hydrogen hubs, which are expected to create about 1000 jobs in total, will be decided through a competitive process this year, and announced in early 2022.

Private companies must apply in a consortia with other local or international industry players.

Santos also on Wednesday announced it had signed a new gas supply agreement with Rio Tinto.

Under the agreement, Santos will supply up to 15 petajoules of natural gas to Rio Tinto commencing in late 2021.