A major carbon capture and storage (CCS) project in Indonesia has taken a significant step forwards with the signing of a joint venture agreement by its two key proponents.

The foundation of this proposed development is the Aceh gas field located offshore northern Sumatra and its associated infrastructure.

Following a tentative agreement earlier this year, Perth-based Carbon Aceh has signed a formal deal with Pembangunan Aceh (Pema) — an enterprise owned by the government of Aceh - to form a joint venture company called Pema Aceh Carbon to evaluate and redevelop the depleted Arun gas field as a CCS facility.

The joint venture agreement was signed by Pema president-director Ali Mulyagusdin and Carbon Aceh managing director David Lim.

Pema Aceh will carry out a study on the development, implementation and operation of the Arun CCS project.

In addition to a detailed analysis of the Arun reservoir, the study will evaluate the potential to reuse existing wells, pipelines and all facilities and equipment considered necessary for the operation of a CCS project.

On completing this study, Pema Aceh will have the exclusive right to develop and operate a carbon storage facility with the aim of cutting carbon emissions and facilitating economic development across the region.

The Arun CCS project is expected to be operational by 2029 — a year later than previously envisaged — and, according to the project proponents, could be the first commercial CCS business in Asia offering open access storage of carbon dioxide.

Preliminary studies undertaken by Carbon Aceh indicate that Arun has the potential to sequester more than 1 billion tonnes of CO2, equivalent to almost three times Australia’s annual CO2 emissions, making it one of the largest CCS projects in the world.

Pema Aceh believes the project is of “national significance” and could make a significant contribution towards Indonesia’s emissions reduction commitments, while also driving economic growth and employment directly and also via related commercial endeavours such as the manufacture of blue hydrogen and ammonia.

Commenting on the deal, Mulyagusdin said: “The signing is a form of support for the Paris Agreement programme on mitigating greenhouse gas reductions in 2060,” adding that it has “the potential to generate significant revenue for Aceh”.

Carbon Aceh’s Lim added: “The CCS project in Arun represents a unique and new business opportunity for the people of Indonesia and is a major step in establishing Aceh as a leading CCS hub in the region and internationally.”

Tutuka Ariadji, director general of SKK Migas, Indonesia’s oil and gas regulator, said in March that the government in Jakarta “is very serious about developing CCS/CCUS technology”, adding at the time that “regulations are being drafted and are expected to be completed in the near future”.

The Arun field — which is estimated to have produced over 14 trillion cubic feet of raw gas and 840 million barrels of condensate over its lifetime — is strategically located, with access to a deep-water port and an LNG plant with compression and regasification facilities.

Gas was produced by natural depletion and the absence of water influx during production, which Carbon Aceh explained means that the reservoir is now at low pressure “creating ideal conditions to receive CO2”.

Arun produced gas at rates of over 3 billion cubic feet per day for more than 10 years, with the gas exported to the onshore Arun LNG terminal.

The last LNG cargo from Arun was shipped to Korea in 2014, since when the field has been producing at about 40 million cubic feet per day of gas used as feedstock for a fertiliser plant.

Preliminary studies by Carbon Aceh suggest the Arun CCS project will trigger the commercialisation of nearby undeveloped gas fields which have a high CO2 content, creating the potential for a blue hydrogen/ammonia scheme and, potentially, the deployment of direct air capture facilities.

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