LNG

UK-based engineering firm Wood Plc has been chosen as lead consultant for an independent study of the next big potential Asia-Pacific LNG export project, the Greater Sunrise Development using gas resources from the Timor Sea.

Australian LNG plant operator Santos has welcomed the federal government’s support for the carbon capture and storage (CCS) method for its Emissions Reduction Fund and Adelaide-based Santos would immediately register the Moomba CCS Project in South Australia with the Clean Energy Regulator to generate Australian Carbon Credit Units (ACCUs).

Santos said its A$210 million (US$151.4M) Moomba CCS Project in the Cooper Basin of outback South Australia would be one of the biggest in the world and safely and permanently store 1.7 million tonnes of carbon-dioxide per year in the same reservoirs that held oil and gas in place for tens of millions of years.

The CCS approval comes as Santos and Australian-listed energy company Oil Search are implementing the takeover of Oil Search by Santos in a deal worth A$8.40 billion (US$6.25 billion) to create a key Asia-Pacific LNG and energy player.

The all-share transaction brings together LNG assets in the Timor Sea, the Australian state of Queensland and in Papua New Guinea.

Under the deal Oil Search shareholders will own around 38.5 percent of the merged entity and Santos shareholders will own 61.5 percent.

In regard to the Moomba CCS project, Santos Chief Executive Officer Kevin Gallagher said this announcement from the Minister for Energy and Emissions Reduction, Angus Taylor, puts Australia at the forefront of CCS deployment.

Gallagher noted that groups such as the International Energy Agency were convinced that reaching greenhouse-gas targets would be “almost impossible” without CCS ventures in place around the world.

Front-end engineering and design is complete for the capture, compression, dehydration (removing any water) and storage of CO2 from the Moomba plant.

As part of this phase of the project, Santos successfully injected approximately 100 tonnes of CO2 deep underground into the depleted gas reservoirs

“CCS will reduce Australia’s carbon emissions and is set to underpin a new, large-scale carbon storage industry for the nation, creating new skilled, secure, well-paid jobs,” stated Gallagher.

“The Australian Government’s focus on CCS and other low-emission technologies sets Australia up to capitalise on our natural assets and become a carbon-storage superpower, building on the position we have established as an energy superpower over more than half a century,” declared Gallagher.

“With the new CCS method now approved, Santos will seek to have the Moomba CCS Project registered to generate ACCUs through the Emissions Reduction Fund. Once the project has been registered, we will be in a position to make a Final Investment Decision to proceed,” he added.

Brett Woods, the Santos Chief Operating Officer for Midstream, Infrastructure and Clean Fuels, said Australia needed low-cost abatement to maintain its position as a leading energy exporter and to decarbonise manufacturing of energy-intensive materials such as steel, cement, bricks, chemicals, plastics and the many everyday products that are made from oil and gas.

“Using natural gas combined with CCS is also the fastest, lowest-cost way to develop a new hydrogen industry for Australia,” added Woods.

BW Offshore, the platforms company listed on the Oslo stock exchange, has formed a partnership with global infrastructure investors for the equity financing of the floating storage and offloading (FPSO) unit for the Barossa gas field offshore Australia to prolong the lifespan of the Darwin LNG plant.

BW Offshore already has a fleet of 14 FPSOs with potential for growth to meet the reliable clean energy needs provided by natural gas.

The Barossa FPSO Services contract has an initial production period of 15 years, with options to extend the production period (in the aggregate) for a further 10 years.

The contract value based on the initial production period of 15 years is US$4.6 billion.

BW Offshore will be responsible for engineering, procurement, construction, installation, and operation of the FPSO.

The FPSO will be turret moored with a new built hull based on BW Offshore's Rapid-Framework design.

Initial gas production from the FPSO is expected during the first half of 2025.

The Barossa FPSO will be financed by a 14-year combined construction and long-term debt facility of US$1.15Bln and US$240 million from the equity joint venture.

Pre-payments

There will also be around US$1Bln in pre-payments by the Barossa gas field operator, Adelaide-based LNG and energy company Santos, and the Barossa Upstream joint venture partners during the construction period.

“The joint venture agreement has been signed by all parties and completion of the agreement is subject to certain customary regulatory approvals which are expected within the next month,” said BW Offshore.

The FPSO joint venture comprises BW Offshore with 51 percent and with a further 25 percent held by ICMK Offshore Investment, a venture comprising Japan’s Itochu Corp. and a subsidiary of the Japanese Meiji Shipping Group.

The Australian financial group, Macquarie Bank, will own the remaining 24 percent.

Santos, which is currently finalizing its agreed take-over of Papua New Guinea LNG stakeholder Oil Search, took a positive final investment decision in March 2021 on the Barossa field development.

The Barossa project represents the biggest investment in Australia’s oil and gas sector since 2012.

The Santos-operated Darwin liquefaction plant in the Northern Territory has the capacity to produce around 3.7 million tonnes of LNG per annum, mainly for Japanese buyers.

Santos has said Barossa and Darwin LNG life extension will create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the Darwin facility.

The FID came a year after Santos completed the acquisition of the assets of US major ConocoPhillips in northern Australia and the Timor Sea, including the existing offshore Bayu-Undan field providing the feed gas now for Darwin.

The Barossa development will comprise the FPSO, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan-to-Darwin LNG pipeline.