Australia’s Santos seeks CCS projects in PNG

Australian independent Santos will seek carbon capture and storage (CCS) opportunities in Papua New Guinea (PNG) as part of its 2040 net zero plan and to offset emissions from its upstream activities on the Pacific island nation.

The pursuit of CCS projects in PNG was one of several pledges made by Santos chief executive officer Kevin Gallagher at the 2021 PNG Mining and Petroleum Conference held virtually in Port Moresby and Brisbane, Queensland ahead of a key shareholder vote and PNG court hearing on the A$21bn ($14.92bn) merger between Santos and fellow Australian independent Oil Search.

Santos plans to apply for a secondary listing on PNG's National Stock Exchange (NSX), where Oil Search has a listing for its 4,000 shareholders located in PNG, Gallagher said. Santos will also seek to appoint a PNG-based director to the Santos board of directors to reflect the importance of PNG to the merged Santos group, he said.

One of the largest assets of the combined Santos-Oil Search company is a stake in the ExxonMobil-operated 6.9mn t/yr PNG LNG venture, in which Oil Search currently owns 29pc and Santos holds 13.5pc. Oil Search also owns 22.8pc of the proposed 5.3mn t/yr Papua LNG venture.

Oil Search also has a significant presence in PNG through the Oil Search Foundation it created to support health and social services in PNG. "In my conversations with the [PNG] prime minister [James] Marape, I have promised that there will not be any major job cuts among the PNG workforce as a result of the merger with Oil Search, and that we will deploy PNG nationals across our entire operations so that they gain experience and we will seek to develop and promote PNG nationals for leadership positions," Gallagher said.

Santos also pledged to maintain the work of the Oil Search Foundation, which has helped the PNG government deal with Covid-19 vaccinations on the island and provide relief work during the earthquake that struck PNG in February 2018.

Gallagher did not provide any specifics on potential CCS projects in PNG.

Santos sees CCS and buying carbon offset credits as the main strategy for achieving its aspiration of net zero emissions in 19 years' time. It sanctioned the 1.7mn t/yr Moomba CCS plant in the onshore Cooper basin in South Australia last month, with a start-up expected in 2024.

Santos also plans to turn the Bayu-Undan gas and liquids field in the Timor Sea into a CCS facility once the field's recoverable resources are exhausted in the coming years. Bayu-Undan provides gas feedstock for the 3.7mn t/yr Darwin LNG venture in Australia's Northern Territory (NT).

The field produced its first gas in July from infill drilling at Bayu-Undan and is part of a plan to narrow the gap between the decline in output at Bayu-Undan and the planned start-up of the Barossa gas backfill project in the Bonaparte basin offshore NT by 2025 that will provide feedstock for the Darwin LNG venture.

Santos also plans to develop carbon credit offset projects in PNG under the Indo-Pacific carbon offset scheme that Canberra created last month. PNG and the Pacific island nation of Fiji have joined the offset scheme.

By Kevin Morrison

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