Australian oil & gas giant and Korean player join forces to decarbonize Asia with carbon capture and storage

Australian energy giant Santos and SK E&S, a Korean energy company, will pool resources on cross-border carbon capture and storage (CCS) solutions, aiming to position Australia at the top of the list of countries working to assist Asia in lowering its carbon footprint.

To this end, a memorandum of understanding (MoU) has been formalized, enabling the two players to cooperate in seeking to develop a low-carbon hub at Darwin in the Northern Territory after a CO2 storage permit was awarded for G-11-AP off the coast of Western Australia in 2022 to Santos Offshore (40%, operator), Chevron Australia (30%) and SK E&S (30%). This permit covers an area of 26,239 km2 within the Bonaparte Basin.

Kevin Gallagher, Santos’ CEO and Managing Director, commented: “Just as Australia has been a reliable energy producer for Asian economies for more than half a century, there is an enormous opportunity for Australia to be at the forefront of helping them decarbonize using our natural competitive advantage in carbon storage resources and knowhow.

“The International Energy Agency 2023 Net-zero update says about 6GTpa of storage from CCS will be required by 2050 – that’s about 100 times higher than today’s operational capacity. And the agency recently noted Australia is well-suited to large-scale deployment of CCS to facilitate domestic CO2 abatement and support regional emissions reductions.”

Furthermore, Santos and SK E&S will collaborate on securing additional CO2 storage, including the Bayu-Undan field, and develop a transboundary business model to aggregate and transport CO2 from Korea to Australia for safe and secure storage underground, as CCS is expected to play an “important role” in decarbonizing the large energy-consuming economies of Asia, according to Santos’ CEO.

“As demand for CO2 transport and storage continues to grow, Santos and SK E&S intend to collaborate under the terms of the MoU to work with relevant governments to urgently progress the necessary regulatory, fiscal, and carbon credit frameworks required to support international collaboration on CCS to decarbonize our region. We know a large scale-up of CCS is required to meet the world’s climate objectives and Santos has the technology, infrastructure, and knowledge to be able to deliver low-cost CCS competitively on a global scale,” highlighted Gallagher.

Moreover, Santos’ CEO explains that the agreement follows the signing of four other MoUs with third parties for carbon capture and storage at Santos’ proposed Darwin and Bayu-Undan CCS hub, indicating strong customer-led demand for CCS as a relatively low-cost decarbonization solution.

Gallagher further underscored: “These MoUs complement a further MoU with Timor-Leste’s national oil company, TIMOR GAP, to explore partnership opportunities for the proposed Bayu-Undan CCS. CCS is a proven technology that is critical to achieving climate goals throughout the region and executing these MOUs demonstrates the increasing demand for CCS and the broad acceptance of CCS as a decarbonization strategy.

“Santos is making excellent progress on our planned three-hub CCS strategy with our Moomba CCS project on track for first injection in 2024, front end engineering and design at Bayu-Undan CCS nearing completion, and plans for Reindeer, offshore Western Australia, continuing to progress.”

After Santos signed a memorandum of understanding with the Timor-Leste regulator, Autoridade Nacional do Petróleo e Minerais (ANPM), in September 2021 to progress CCS at the Bayu-Undan field, the firm confirmed that the proposed CCS project entered the front-end engineering and design (FEED) phase in March 2022. At the time, the firm explained that the Bayu-Undan FEED work would include engineering and design for additional CO2 processing capacity at Darwin LNG.

Santos is the operator of the Bayu-Undan offshore gas production facility and Darwin LNG with a 43.4% interest in each while the remaining partners are SK E&S (25%), Inpex (11.4%), Eni (11%), and Tokyo Gas (9.2%).

Recently, Santos was prevented from continuing its planned work on the Barossa gas field development project offshore Australia due to an interim injunction, which was granted by the Federal Court of Australia. The Australian giant’s guidance on the project’s cost and schedule remains unchanged, provided the GEP pipelay is completed in 2023, and drilling activities begin before the end of the year.