The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), Australia's regulator for offshore petroleum activities, has accepted Santos Ltd’s Barossa Development Drilling and Completions Environment Plan (EP).
The approval was granted on December 15, 2023, and follows a period of reconsideration and extensive consultation.
Previously, in September 2022, NOPSEMA's March 2022 approval of the EP was set aside.
In response, Santos engaged in thorough consultations with the Tiwi Island community and other relevant stakeholders. These consultations were conducted in accordance with the prevailing regulations, NOPSEMA’s guidelines and the directives from the Full Federal Court’s decision in the Tipakalippa proceedings.
Moving forward, Santos is actively pursuing all remaining approvals necessary for the Barossa Gas Project, which could prove significant in Australia's energy sector management.
The project
The Barossa Gas Project is about 285 kilometres north-northwest of Darwin. The project aims to extract natural gas from the Barossa field and transport it to the existing Darwin LNG (DLNG) facility, with a target of first gas production by 2025.
The infrastructure for this project is extensive and includes a Floating Production Storage and Offloading (FPSO) facility, a comprehensive subsea production system and necessary in-field subsea infrastructure.
Additionally, the project encompasses the Gas Export Pipeline (GEP) and the Darwin Pipeline Duplication (DPD), essential components for transporting the extracted gas.
The development plan for the Barossa field involves drilling up to eight subsea wells. This includes six wells across three drill centres, with contingency provisions for an additional two wells if required.
Extracted gas and condensate will be gathered from these wells through the subsea production system and channelled to the FPSO facility via a network of subsea pipelines and structures.
At the FPSO facility, initial processing will occur to separate the natural gas, water and condensate. Following this separation process, the dry natural gas will be transported via the gas pipeline for further onshore processing at the DLNG facility. The condensate, meanwhile, will be transferred from the FPSO to specialised tankers for export.
Merger in the works
Santos recently initiated preliminary discussions regarding a prospective $80 billion merger with its larger competitor, Woodside Energy. This development coincides with both companies seeking final environmental clearances for significant gas projects.
While Woodside has recently obtained NOPSEMA approvals for drilling at its $16.5 billion Scarborough Gas Project in Western Australia, it still awaits approval for the operational aspects of the project.
In a separate move, Santos has entered into an agreement with two Japanese firms, JX Nippon Oil & Gas Exploration and Eneos Corporation, to explore the feasibility of importing Japanese waste carbon emissions for treatment at its carbon capture and storage (CCS) project in central Australia.
This project envisages the transportation and storage of up to 5 million tonnes of CO₂ per year at the $US165 million Moomba CCS project in South Australia, with plans to increase this to 10 million tonnes by 2035 and 20 million tonnes by 2040.
The initiative follows the recent passing of the 'sea-dumping bill', which permits the transportation of captured carbon across international maritime borders, potentially positioning Australia as a key destination for carbon waste from fossil fuel consumers in Asia.
Kevin Gallagher, CEO of Santos, highlighted the Moomba project's significant potential as a decarbonisation hub, noting its alignment with the growing demand for carbon abatement technologies in the region.
Santos is also collaborating with Tokyo Gas and Osaka Gas on "e-methane" production in the Cooper Basin, which involves combining green hydrogen with captured CO₂.
Gallagher noted that Asian customers were showing a stronger preference for carbon-neutral methane, which can directly replace natural gas, over hydrogen, which requires substantial new infrastructure.
The agreement with JX and Eneos follows Santos' recent collaboration with APA Group to develop infrastructure for CO₂ transportation and handling across eastern Australia. The Moomba project, expected to commence operations around mid-2024, is designed to store up to 1.7 million tonnes of CO₂ annually, equating to over one-quarter of the emission reductions achieved by Australia's electricity sector in the year to March 2023.
While Santos asserts that CCS technology is effective, there are critics who argue it is unproven and merely extends the life of fossil fuels, which they believe should remain underground to mitigate catastrophic climate change.