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IEEFA slaps 'dirtiest gas' label on Barossa

13th December 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Institute for Energy Economics and Financial Analysis (IEEFA) has labled oil and gas major Santos’ Barossa project as economically and environmentally ‘unviable’.

Santos recently lost an appeal in the Full Federal Court against a September decision by the Federal Court to set aside the acceptance by the National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) of an environmental plan covering the drilling and completion activities in relation to the Barossa gas project.

The Federal Court’s decision was based on a finding that Nopsema could not be lawfully satisfied that the drilling environment plan met the criteria required by the regulations and in particular failed to assess whether the drilling environment plan demonstrated that Santos consulted with each person that it was required by the regulations to consult with.

Santos has maintained that the company had consulted with Traditional Owners and their representative bodies on the Barossa gas project since 2016 and will continue to do so, taking into account the guidance provided by the Court.

The company also said that it did not anticipate any material cost or schedule impact from the Federal Court decision, and first gas from the Barossa gas project remained on track to be delivered in the first half of 2025.

A report from the IEEFA on Tuesday called into question Santos’ environmental claims around the project, claiming instead that the project would produce Australia’s dirtiest gas.

“Barossa gas is the dirtiest gas used to make liquefied natural gas (LNG) in Australia, in terms of its 18 volume percent carbon dioxide (CO2) content. It is three times higher than the nearly depleted Bayu-Undan gas that the Darwin LNG plant currently processes. Barossa’s CO2 content is six times higher than in the gas processed in the North West Shelf LNG plant in Western Australia.

“Consequently, on completion of its Barossa gas to Darwin LNG ‘backfill’ development, as described initially and approved, the Barossa LNG project would have produced LNG with an emissions intensity of 1.5 t/CO2 per tonne of LNG, which is twice the current average for the Australian LNG industry.

“Santos has proposed using carbon capture and storage (CCS) to sequester a portion of the emissions to counter the criticism that it is building ‘a CO2 factory with an LNG by-product’. However, this would leave even more emissions – from combustion to power the LNG process and piping CO2 for 800 km around the Timor Sea,” the report stated.

The IEEFA claimed that Santos was using the Bayu-Undan CCS project as a justification for an "unapproved and unjustifiable" project, adding that Barrossa was not viable.

Furthermore, the report noted that while the Barosssa project was 46% complete, the Northern Territory government was yet to approve the 10-million-tonne-a-year Bayu-Undan CCS project.

“Going forward, Santos must now run the approvals process for the complete project with CCS aspects and submit an environmental-impact statement (EIS) for its Bayu-Undan CCS at the same time if it is to be seen as acting in good faith.

“Santos must reveal how CCS would affect the emissions and have it approved by Nopsema, the Northern Territory Environmental Protection Authority, the Tiwi people and the Timor-Leste government before it proceeds with construction,” the report said.

Santos MD and CEO Kevin Gallagher in June told the Timor-Leste Energy and Mining Summit that the Bayu-Undan CCS project had the potential to be the catalyst for the development of other fields in the region and that the Barossa project could be the foundation customer, delivering 2.3-million tonnes of CO2 per year, making Barossa one of the lowest-carbon intensity LNG projects in the world.

The Barossa project comprises a floating production, storage and offloading vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline.

Santos and its Barossa joint venture partners also recently took a final investment decision to proceed with the Darwin pipeline duplication process, which would extend the Barossa gas export pipeline to the Santos-operated Darwin liquefied natural gas (DLNG) facility and allow for the repurposing of the existing Bayu-Undan to Darwin pipeline to facilitate CCS options.

Gas from the Barossa field, located 300 km north of Darwin, is intended to replace the current supply from the Bayu-Undan facility located in Timor-Leste.

First gas production at DLNG using Barossa gas is targeted for the first half of 2025.

Santos was unavailable for comment at the time of writing.

Edited by Creamer Media Reporter

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