Field_Development

Eni and Santos to explore development opportunities in Australia and Timor-Leste

Collaboration could provide pathway to development for several fields while the pair are also exploring a potential CCS project

Potential expansion: Eni and Santos both hold stakes in the Darwin LNG facility in northern Australia
Potential expansion: Eni and Santos both hold stakes in the Darwin LNG facility in northern AustraliaPhoto: CONOCOPHILLIPS
Perth

Italian giant Eni is teaming up with Australian independent Santos to collaborate on opportunities in northern Australia and Timor-Leste, including in carbon capture and storage (CCS).

Santos revealed Monday it had signed a memorandum of understanding with Eni, which will see the pair assess potential synergies from sharing infrastructure in the region that could lead to the development of several existing fields.

This will include exploring potential synergies between infrastructure associated with Santos’ Barossa development and Eni’s proposed Evans Shoal development.

Other infrastructure includes an offshore pipeline to Darwin and onshore associated gas processing, which Santos claimed could lead to liquefied natural gas expansion developments.

It also stated the MoU could see it collaborate with Eni on the possible development of its Petrel and Tern fields through Eni’s Blacktip and Yelcherr gas plant facilities.

In a separate statement on Monday, Eni confirmed the agreement opened up potential collaboration in new upstream development opportunities in relation to other stranded resources offshore northern Australia.

Evans Shoal

The agreement comes after it was reported Eni had dropped plans to sell off its portfolio of Australian and Timor-Leste assets, including stakes in Bayu-Undan and the Darwin LNG plant.

Eni had enlisted Citibank to lead the sale of the assets, however, it was reported the Italian giant was unable to attract satisfactory bids for the assets, which had been valued at up to A$1 billion (US$772.3 million).

Included in Eni’s portfolio is the undeveloped Evans Shoal gas project, which had been earmarked as potential backfill for the Santos-operated Darwin LNG plant, which is currently fed by the depleting Bayu-Undan development.

While the recently sanctioned Barossa development will initially replace Bayu-Undan as the main feedstock for the 3.7 million tonne per annum plant, Santos has approval to build two more trains at the site and is open to third party gas opportunities.

CCS opportunity

Evans Shoal contains 10 trillion cubic feet of raw gas in place, but with a CO2 content of 28%.

However, Eni and Santos will also look at potential CCS opportunities through their new agreement, with Santos confirming they would look to repurpose the Bayu-Undan facilities to extend the life of the project, including through a potential CCS project, subject to the agreement of the Timor-Leste government.

“CCS opportunities at Bayu-Undan are extremely exciting for Santos and Eni and today we are saying, we would like to be open for business to take your CO2,” Santos chief executive Kevin Gallagher said.

“A CCS project at Bayu-Undan could provide a new job-creating and revenue-generating industry for Timor-Leste with quality carbon credits increasing in both demand and value internationally.”

Eni stated the proposed CCS project would have the potential to not only be used for the two companies' own assets, but could also be opened up to potential third parties.

Gallagher also noted that the London Convention was amended in 2019 to allow CO2 to be transported across jurisdictions to enable the establishment of storage hubs, providing the opportunity to store CO2 from Australia at the potential offshore Timor-Leste CCS hub.
“Capturing and storing CO2 from industries in the Northern Territory will help it meet its net zero emissions by 2050 target,” he said.

“That’s good for the environment, good for local jobs, good for local investment and good for regional development.”

Eni has previously stated it was looking at three different CO2 storage scenarios for Evans Shoal, including reinjection into the Evans Shoal reservoir, reinjection into the depleted Bayu-Undan field and a third option to inject into a reservoir in the Petrel sub-basin.

Evans Shoal lies in NT/RL7, where Eni holds a 72.22% operated interest and Malaysia’s Petronas holds the remaining 27.78% equity. Japan’s Osaka Gas withdrew from the permit last year, handing over its 10% stake to the remaining two partners.

(Copyright)
Published 3 May 2021, 03:11Updated 6 May 2021, 07:21
EniTimor-LesteSantosEvans ShoalKevin Gallagher