The proposed Bayu-Undan carbon capture and storage (CCS) project has been given a boost after the signing of four non-binding deals, according to Australian LNG player Santos.
Santos said in a statement on Wednesday it has signed four memoranda of understanding for the proposed storage of CO2 emissions from third parties to underpin the initial development of the CCS project, where front end engineering design work is nearing completion.
The Australian firm awarded the FEED contract to compatriot engineering firm Worley for the Bayu-Undan offshore facilities and pipeline in July last year.
Santos has a 43.4 percent operated interest in Bayu-Undan and Darwin LNG. The remaining interest is held by SK E&S, Inpex, Eni, Jera, and Tokyo Gas.
The firm said in the statement that the four non-binding MOUs for CO2 supply to Bayu-Undan CCS have been executed with potential upstream gas and LNG projects offshore the Northern Territory and in Darwin, and an energy and industrial conglomerate in South Korea.
Moreover, the deals indicate demand for CO2 storage at Bayu-Undan CCS could be in excess of 10 million tonnes per annum (Mtpa), the firm said.
According to the firm, Bayu-Undan CCS ex-Darwin will be a relatively low-cost carbon solution, with costs expected to be well within the Australian government’s proposed price cap on Australian carbon credit units.
While the Bayu-Undan CCS project is located offshore Timor-Leste, Darwin is set to be an important regional hub for CO2 capture, transfer and storage to Bayu-Undan, as well as to other potential CCS locations offshore the Northern Territory, which are still in the exploration and feasibility stages, the firm said.
FID targeted for 2025
Santos CEO Kevin Gallagher said in the statement that Timor-Leste is well-positioned as a future provider of carbon management services.
The company is working with both the Timor-Leste and Australian governments to bring the Bayu-Undan CCS project to fruition and realize its potential as an important regional decarbonization project, he said.
Parties to the MOUs will now work cooperatively toward securing binding commitments, including one party looking the opportunity for international CO2 transfer and carbon management services.
Gallagher said the execution of the MOUs demonstrates the strong demand for Santos’ proposed CCS projects.
“With CO2 transport and storage demand only likely to grow, we will continue to work with the Timor-Leste and Australian governments to urgently progress the necessary regulatory and fiscal frameworks and approvals required to support the development of Bayu-Undan CCS,” he said.
The Bayu-Undan CCS project is situated within Santos’ Darwin and Bayu-Undan hub, part of Santos’ three hub CCS strategy that includes the Moomba CCS project which is under construction and 60 percent complete.
Santos expects first injection at Moomba CCS in 2024.
Also, the company said that it is now targeting a final investment decision for Bayu-Undan CCS in 2025.
It previously said that it expected to take FID in 2023.