Santos’ new deals with Japanese companies zero in on low-carbon fuels in Cooper Basin

With a focus on transforming the Cooper Basin into a decarbonization and low-carbon fuels hub, Australian energy giant Santos has signed multiple agreements with Japanese companies.

Following the passage of legislation through the Australian parliament to facilitate the cross-border transfer of CO2, Santos has signed a memorandum of understanding (MoU) with JX Nippon Oil & Gas Exploration Corporation and ENEOS Corporation to collaborate on carbon capture and storage (CCS).

Specifically, the companies agreed to undertake a joint feasibility study that will evaluate the potential to capture, transport, and sequester emissions from Japan, supporting the expansion of Santos’ Moomba CCS project.

The aggregation and management of carbon at Moomba would also support Santos’ Energy Solutions low-carbon fuels ambitions and complement current studies with Tokyo Gas and Osaka Gas for potential low-carbon e-methane production in the Cooper Basin. This would facilitate the export of e-methane, made by combining green hydrogen with CO2 obtained from industrial emissions or direct air capture in a circular economy.

The MoU seeks to identify and define commercial and investment opportunities covering the potential importation of up to 5 million tons per annum (mtpa) of CO2 by 2030, 10 mtpa by 2035, and 20 mtpa by 2040 from Japan to the Moomba CCS project, via either Port Bonython in South Australia or Gladstone in Queensland.

This would potentially provide a large-scale source of CO2 to support Phase 2 of the Moomba CCS project and provide feedstock for future e-methane production. At the same time, this would put South Australia and Santos front and center in helping Japan to decarbonize its economy, Santos explained.

According to Santos CEO and Managing Director, Kevin Gallagher, the first phase of the Moomba CCS project is 75% complete with the first injection on track for 2024. Moomba CCS is targeting about $24 per tonne lifecycle breakeven storage costs which will make it one of the lowest-cost CCS projects globally.

The project will have the capacity to store up to 1.7 million tonnes of CO2 per year.

Building on this MoU and previous agreements with APA and ADNOC, Santos has also signed an agreement with Japan’s Toho Gas, one of the largest gas utility companies in central Japan, to investigate the potential for producing carbon-neutral e-methane in South Australia’s Cooper Basin.

Santos CEO said the collaboration with Toho Gas will focus on the Cooper Basin which is shaping up as a large-scale decarbonization and low-carbon fuels hub with potential access to a vast CO2 source from industrial emissions or direct air capture, and which has vast renewable resources for making green hydrogen with electrolyzers.

“If we progress to the next stage, this collaboration could potentially extend the life of the Cooper Basin for another 55 years, keeping it at the center of a modern Australian energy industry and supporting hundreds of well-paying, skilled, and secure jobs for another three generations and beyond,” Gallagher concluded.

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