Santos and Beach Energy explore expansion of carbon capture and storage

Santos and Beach Energy have secured a licence to investigate the prospect of storing more carbon dioxide in South Australia.

Santos and Beach Energy have secured a licence to investigate the prospect of storing more carbon dioxide in South Australia, as the duo plot expanding its presence in the controversial practice of storing emissions to meet soaring global demand.

Expansion of so-called carbon capture and storage (CCS) in Australia could aid the country’s quest to drastically reduce emissions by 43 per cent by 2030, but the technology has achieved patchy results locally and is vehemently opposed by environmentalists who say it will extend the use of fossil fuels.

The partners have been granted a gas storage retention licence in South Australia, which will allow Santos and Beach to determine the nature and extent of natural reservoirs, test the reservoirs for storage of CO2 and establish the commercial feasibility of CO2 storage and storage techniques.

The duo are already developing a $US165m ($259.4m) CCS project in South Australia called Moomba, but should they determine there is scope, they could expand.

Santos chief executive Kevin Gallagher said the development of CCS in Australia will aid global efforts to decarbonise.

“This is a potential opportunity for low-cost abatement of emissions for nearby customers in hard-to-abate sectors such as steel, cement and metals manufacturing. Our customers in Asia are also looking to CCS in Australia to help their economies decarbonise,” Mr Gallagher said.

“The technology exists and is increasingly cost-competitive to capture large-scale industrial carbon dioxide sources and transport the CO2 long distances by ship and pipeline to locations such as Moomba.”

The success of Moomba – which Santos and Beach expect online next year – shapes as a defining moment for Australia’s gas industry and the country’s emissions reduction aspirations.

CCS has endured mixed success, fuelling allegation from critics that the technology will not deliver the promises that the fossil fuel industry insists it will.

Santos chief executive Kevin Gallagher. Picture: Mark Brake

But if Santos and Beach can make it work, it will allow the gas industry to coexist with meaningful emissions reduction efforts, Beach’s interim chief executive Bruce Clement said.

“For Beach, Moomba CCS will abate a significant proportion of our company’s emissions, and the future opportunities for third party CO2 abatement are very exciting,” Mr Clement said.

Should Moomba prove the doubters wrong, it will also be extremely lucrative for Santos and Beach.

Both companies will be able to claim carbon credits should they successfully abate emissions, which they could use to meet their own climate requirements or sell to other emitters.

The development of CCS coincides with a significant rise in global interest, which Mr Gallagher said could be a significant boon to Australia’s $2.5 trillion economy.

“This is an opportunity – and an obligation – that Australia should be grabbing with both hands. Australia has been a reliable energy-producing nation for the giant energy-consuming economies of Asia for more than half a century,” Mr Gallagher said.

“By developing a new CCS-based industry, Australia could play a critical role in helping our whole region decarbonise while also delivering the energy security and affordability that underpins stability in the Asia-Pacific.”

Illustrating the point, Santos said it has entered into an agreement with Korean energy giant SK E&S to develop a hub in Darwin and CCS sites in Bayu-Undan in the Timor Sea.

Carbon dioxide could be transported from Korea and then stored underground off the coast of Australia

Offshore CCS is being pushed by the federal Labor government, with Resources Minister Madeleine King earlier this year releasing 10 sites across seven oil and gas basins in Western Australia, Victoria and Tasmania as possible sites for new developments. Ms King said the sites had been chosen for their geology and storage potential and to minimise the impact on the marine environment.

Australia’s oil and gas industry have welcomed the moves, insisting it will accelerate the development of the CCS industry, but environmentalists and some politicians have vowed to oppose incentives to extend the lifespan of fossil fuels.

Originally published as Santos and Beach Energy explore expansion of carbon capture and storage