(WO) – Santos and its Bayu-Undan joint venture partners have signed a Memorandum of Understanding (MoU) with Timor-Leste''s national oil company, TIMOR GAP, to explore partnership opportunities for the proposed Bayu-Undan carbon capture and storage (CCS) project offshore Timor-Leste.
The MoU follows four non-binding MoUs for CO2 supply to Bayu-Undan CCS that indicate demand for CO2 storage at Bayu-Undan CCS could be more than 10 million tonnes per annum (Mtpa).
The MoU with TIMOR GAP includes sharing information about Bayu-Undan CCS and exploring potential partnership opportunities, including equity participation for TIMOR GAP in the Bayu-Undan CCS project.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said Bayu-Undan CCS is well positioned to provide future carbon management services to the Asia Pacific region.
"This could be an exciting new industry for Timor-Leste, putting it at the leading edge of the global energy evolution and generating revenue, local jobs and business opportunities for the nation," Gallagher said/
"This MOU is yet another agreement highlighting the strong interest in carbon capture and storage, and its broad acceptance as a safe, proven technology that is absolutely critical to achieving the world''s climate goals.
Bayu-Undan CCS ex-Darwin will provide a cost-competitive carbon solution because of its large scale and ability to utilize existing pipelines and other infrastructure.
In addition, the storage reservoirs are well understood, have previously held gas and condensate in place for tens of millions of years, and will provide safe and permanent CO2 storage.
The project has the potential to reduce the absolute emissions and emissions intensity of Australian and Timor-Leste gas and LNG projects, as well as other hard to abate industries in the region.
It also means that Australian and Timor-Leste gas and LNG projects will have a competitive advantage in a low-carbon world, with the potential to offer abated gas as a premium product for customers.
Australia''s Santos has started front-end engineering and design (FEED) work for its proposed giant carbon capture and storage (CCS) project offshore East Timor at the Bayu Undan field. Significantly, Santos aims to take a final investment decision (FID) in 2023 on the CCS project, which it claims has the potential to be the largest in the world.
"The Bayu-Undan CCS project could potentially safely and permanently store up to 10 million tonnes of carbon dioxide (CO2) per annum, equivalent to about 1.5% of Australia''s carbon emissions each year," said Santos, which operates the Bayu-Undan offshore gas production facility in East Timor connected to its Darwin liquefied natural gas (LNG) export plant in Australia.
The Bayu-Undan FEED work will include engineering and design for additional CO2 processing capacity at Darwin LNG plus repurposing of the Bayu-Undan facilities for carbon sequestration operations after gas production ceases.
Santos said it is working closely with East Timor''s regulator, ANPM, towards the necessary agreements and regulatory framework that will be required for the Bayu-Undan CCS project. The project will also need agreements between the governments of East Timor, also known as Timor-Leste, and Australia, and some Australian regulatory arrangements.
"Located in Timor-Leste with potential CO2 sources from Australian gas projects and other industries in the Northern Territory, Bayu-Undan CCS could be the start of a valuable new carbon services industry for Timor-Leste," said Santos chief executive Kevin Gallagher.
"Entry into the FEED phase has strong support from our five joint venture partners headquartered in Japan, Korea and Italy. And last month, a meeting of the Timor-Leste and Australian Prime Ministers included a commitment by Australia to establish an LNG Partnership Fund to deepen links between Australia and Timor-Leste in gas development and trade, including in the use of carbon capture and storage," added Gallagher.
The Australia government said in a statement released 17 February that the Prime Ministers discussed the important contribution the exploitation of gas resources in the Timor Sea makes to both countries'' economic prosperity, and the close cooperation between Australia and Timor-Leste under the Maritime Boundaries Treaty, which entered into force in 2019. Australian Prime Minister Scott Morrison committed to establish an LNG Partnership Fund to deepen links between Australia and Timor-Leste in gas development and trade, including in the use of carbon capture and storage (CCS).
With about 80% of the world''s energy still coming from hydrocarbons, including natural gas, and new supply investment still required to meet the world''s ongoing demand for these products, it is essential that the industry decarbonises production, noted Santos. "CCS offers a large-scale, low-cost and permanent way to progressively make these fuels cleaner. CCS will also enable new clean fuels industries such as hydrogen which will dramatically reduce not only Scope 1 and 2 emissions, but Scope 3 emissions as well," added the company.
Santos has a 43.4% operated interest in Bayu-Undan and Darwin LNG. The remaining interest is held by SK E&S (25%), INPEX (11.4%), ENI (11%), JERA (6.1%) and Tokyo Gas (3.1%).
Santos'' approved Barossa project is one of several potential CO2 sources for Bayu-Undan CCS, but importantly this project offers a region wide carbon solution, reckons Santos. Santos had proposed to use the Bayu Undan reservoir for capturing and storing CO2 from Barossa, which it is developing off north-western Australia. The $3.6 billion Barossa projects'' gas has a very high CO2 content compared to other projects in the region. Some critics claim it is one of the dirtiest gas developments proposed globally.
Santos said that "a final investment decision (FID) on Bayu-Undan CCS is targeted for 2023, subject to relevant regulatory frameworks and agreements being in place in both Timor-Leste and Australia. Non-government organisations in East Timor have raised concerns about how quickly Santos CCS project is progressing, urging the government in Dili to fully analyse the implications of such a development.
The International Energy Agency (IEA) Roadmap to Net Zero by 2050 envisages carbon capture, utilisation and storage (CCUS) expanding to 7.6 billion tonnes of CO2 per year by 2050 from around 40 million tonnes per year today.
Developing carbon capture and storage (CCS) projects in Southeast Asia is considerably cheaper than developing similar projects in more developed economies, such as Australia.
Initially, the plan is to capture carbon dioxide (CO2) from Santos'' Barossa gas development in northern Australia and then pipe it to East Timor, where it will be injected underground into Bayu Undan''s geological formations for storage.
Santos is taking advantage of the comparatively lax licensing requirements and regulations governing carbon storage in East Timor, also known as Timor Leste, to develop the giant CCS hub.
Carbon storage sites in Asia are expected to be among the cheapest globally, according to Rystad Energy, a consultancy. Drilling and well services are generally cheaper in Asia, but significantly, licensing requirements are not as troublesome or complicated in Asia compared to more economically developed countries, Yvonne Lam, head of carbon markets and CCUS research at Rystad, told Energy Voice. This helps cut costs.
In more developed regions, such as Europe and Australia, different licensing requirements exist for CO2 storage. They are more stringent and require operators to perform extra studies to ensure no carbon leakage will occur. Test wells are also needed before a project can start. Therefore, "there are a lot more studies, work, and time, needed to be spent before a company can apply and obtain licenses," added Lam.
"Currently, except for Australia, most countries in Asia Pacific do not have these licensing requirements. Significantly, it reduces the time and effort needed to access fields for CO2 storage," said Lam.
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