Carbon capture and storage (CCS) will have a greater impact on the energy transition than any other technology, according to Santos chief executive Kevin Gallagher.
Speaking at the APPEA 2022 conference in Brisbane, he said: “No technology can make a bigger difference to the energy transition than carbon capture and storage.
“This will include technology to extract and store carbon from our operations, and also exciting technologies such as Direct Air Capture and Post Combustion Capture, which have the potential to significantly reduce and offset Scope 1, 2 and 3 emissions, especially in hard-to-abate sectors.
“What is abundantly clear is that we must maintain the momentum of the energy transition without compromising energy security — and that includes affordability — as we strive for universal access to reliable energy.
“We can only do this through decarbonisation, not defossilisation.”
Santos today is constructing a 1.7 million tonnes per annum CCS project at Moomba in South Australia’s Cooper basin.
“Not only will our Moomba project be one of the biggest in the world today, it will be one of the lowest cost, at around US$24 per tonne,” said Gallagher.
“That is very competitive compared to prices in a number of carbon markets today.”
At Moomba, Santos is also trialling CSIRO (the Australian government’s Commonwealth Scientific & Industrial Research Organisation) and other Direct Air Capture and Post Combustion Capture technologies.
“These exciting technologies have the potential to negate emissions elsewhere in the economy, especially in hard-to-abate sectors that Australia still needs,” he noted.
Santos this year was one of the first companies globally to book carbon storage resources — 100 million tonnes in the Cooper basin.
“I think this is really exciting — because I believe that CO2 is about to become the fastest growing commodity in the world,” added Gallagher.
The Cooper basin has storage capacity for up to 20 million tpa of CO2 for up to 50 years, which would be equivalent to taking one-third of light duty vehicles off Australian roads each year.
Also, earlier this year, Santos entered the front-end engineering and design stage on its Bayu-Undan CCS project in the Timor Sea, northwest of its Darwin LNG project.
Bayu-Undan CCS envisages a storage capacity of around 10 million tpa of CO2 once production from the field ceases.
This offshore CCS scheme would enable Santos to store 2.3 million tpa of CO2 its Barossa gas project, making it one of the lowest-carbon liquefied natural gas projects in the world, Gallagher told delegates.
Bayu-Undan is a low-cost, large-scale, commercial CCS proposal that could also store CO2 from Santos’ LNG customers in Korea and Japan which, he said, have already expressed “great interest” in the project.
“Just as our customers have looked to us for energy resources for decades, they are now looking to us to help them decarbonise their economies through CCS,” he said.
Meanwhile, Santos is already looking at the potential for its Reindeer field facilities in Western Australia to be used for CCS when gas production ends.
“Importantly, all these CCS projects are at the low end of the global CCS cost curve, giving Santos a critical competitive advantage at a time when the need to accelerate CCS deployment globally has never been greater,” said Gallagher.
He hailed natural gas combined with CCS technology as being “the fastest and most realistic path to a future hydrogen economy, at a price customers will be willing to pay”.
In the International Energy Agency’s Net Zero scenario, in 2050 around half of the world’s gas production would be used to make hydrogen and about 40% of the world’s hydrogen would be made from natural gas.
Decarbonisation is not costless
“The challenge has always been how to make [these CCS projects] economic and create revenue streams from these projects, and I believe their time has now come. But we should be under no illusion that decarbonisation is costless,” cautioned Gallagher.
“We will need private sector investment and innovative public policy to accelerate the deployment of these important low-carbon technologies at the huge scale that is now needed.”
However, he told delegates he is confident that Australia is well positioned to lead the energy transition through the combination of natural gas and CCS.
“Carbon capture and storage will not only reduce the Scope 1 and 2 emissions from oil and gas developments, it will enable faster, lower-cost deployment of clean fuels such as hydrogen, which has no Scope 3, or customer, emissions,” said Gallagher.