Santos and BP join forces on carbon capture and storage
Energy giants Santos and BP have entered an agreement to bury up to 20 million tonnes of carbon each year in the Moomba gas fields and will now seek government financial support in the form of carbon credits.
The agreement, to be announced on Wednesday at a summit of oil and gas executives in Canberra, will see BP contribute $20 million towards Santos’ proposed carbon capture and storage facility in far north South Australia.
Carbon capture and storage is expected to be an element of the federal government’s soon-to-be-announced technology road map, which will seek to chart a course to low emissions, possibly net zero, by 2050.
Energy and Emissions Reduction Minister Angus Taylor has long been aware of the proposal and said he was happy to keep engaging with Santos, especially if it can sequester carbon for the low price it is claiming.
Santos would be looking for support from the government’s $2 billion emissions reduction fund and believes it can sequester carbon at less than $30 a tonne, and possibly as low as $26 a tonne.
“Our aim is to drive these costs lower with scale and experience,” said Santos chief executive officer Kevin Gallagher.
Santos contends that it cannot only offset its own emissions, which is primarily the 1.7 million tonnes of CO² produced each year when separating gas at Moomba, but that it could sequester the emissions of others, such as cement manufacturers.
“Australia needs low-cost, large-scale abatement to maintain our position as a leading energy exporter and manufacturer of energy-intensive materials such as steel and cement, as well as to enable new industries such as hydrogen,” Mr Gallagher said.
‘A large-scale carbon sink’
While the initial proposal is to sequester 1 million tonnes a year, the Cooper Basin has the capacity to store 20 million tonnes a year for 50 years.
At that rate, it could sequester within four decades the amount of carbon dioxide stored in the Amazon rainforest.
“It has the potential to be a large-scale carbon sink for power generators and other industries in eastern and southern Australia,” Mr Gallagher said.
“Today, CCS projects globally store around 40 million tonnes per year of carbon dioxide, far short of the more than 2 billion tonnes of carbon dioxide the International Energy Agency forecasts that CCS projects will need to store each year by 2040 if the world is to meet its climate aspirations.”
The proposal involves Santos compressing the CO² from its Moomba plant and transporting it by pipe to underground reservoirs which held oil and gas in place for 85 million years, “and can now provide safe and permanent storage of carbon”.
Santos, along with BP, the cement industry and carbon sequestration companies, have previously argued that “geological” storage of carbon should be eligible for Australian Carbon Credit Units in the same way that ACCUs were issued for “biological” storage of carbon in tree-planting schemes.
“A revenue stream, such as from Australian Carbon Credit Units, will be a critical enabler for our Moomba CCS project,” Mr Gallagher said.
Extracted from AFR