Santos approves $220m Moomba carbon storage after federal approval of ‘handout’

Gas producer Santos has given the go-ahead to a $220 million project to store carbon dioxide in South Australia after the Federal Government allowed it to receive carbon credits that have been criticised as a fossil fuel handout.

Santos chief executive Kevin Gallagher, who has travelled to Glasgow for the COP26 climate summit, said the project will store 1.7 million tonnes of carbon dioxide a year from 2024, making it one of the biggest projects in the world with the lowest unit costs.

The carbon storage project will be built near Santos’ gas plant at Moomba, SA.Credit:Kelly Barnes

“We forecast a full lifecycle cost of less than US$24 per tonne of CO2, including cash costs in operation of US$6-8 per tonne of CO2,” Mr Gallagher said.

“This decision is a critical step in decarbonising natural gas on our path to new low-emissions and clean-burning fuels such as hydrogen.

“It is also an important milestone in our plan for Santos to achieve net-zero Scope 1 and 2 emissions by 2040.”

The approval by Santos and its one-third partner Beach Energy came after the Clean Energy Regulator registered the project, allowing it to qualify for Australian carbon credit units for 25 years.

Mr Gallagher said Australia had an advantage in carbon storage and Santos had received significant international interest in the Moomba project.

Carbon capture and storage has become increasingly controversial as some see it as a way to prolong the production of fossil fuels rather than reduce global emissions.

The gas fields near Moomba in the Cooper Basin contain carbon dioxide that is currently separated from the natural gas and vented to the atmosphere.

The CCS project will store this carbon dioxide from the reservoirs. However, the greenhouse gases produced from the production, transportation and use of the gas sold by Santos and Beach Energy will still be vented.

Institute for Energy Economics and Financial Analysis director Tim Buckley said at a carbon price of about $17 a tonne, that the federal government’s Emissions Reduction Fund paid in October, the $220 million project would receive about $720 million in carbon credits over its life.

“Two-thirds of billion dollars of taxpayer cash subsidies will make this yet another handout,” Mr Buckley said.

“Any pretence the fossil fuel industry is able to stand on its own two feet is clearly absent.”

Carbon capture and storage is one of seven priority technologies in the federal government’s emissions reduction plan released in October before the Glasgow summit.

Moomba was one of five prospective carbon dioxide storage sites in Australia listed in the plan.

Another preferred site was Chevron’s troubled project at its Gorgon LNG project on Barrow Island where a series of technical problems has caused carbon dioxide storage in the first five years of operation to be significantly less than required by the WA government.

The Western Australian government is expected to soon reveal the penalty it will impose on US-major Chevron for the estimated 4 to 5 million tonnes of carbon dioxide above requirements that was vented to the atmosphere. The facility that has cost $3.1 billion to date is the world’s largest facility dedicated to storing carbon dioxide.

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