Santos Aims for 14 MMtpa Carbon Storage Portfolio by 2040

Santos Ltd. targets to establish a carbon storage business with a capacity to permanently store 14 million tonnes per annum (MMtpa) of third-party carbon dioxide equivalent emissions by 2040.

“The successful startup of Santos’ 1.7 million tonnes per annum Moomba Carbon Capture and Storage (CCS) project last month, with the technology and reservoirs performing as expected, demonstrates the potential for future phases to provide safe, low-cost, permanent carbon storage for customers and hard-to-abate industries”, the Australian oil and gas exploration and production company said in a statement online.

The project injects into depleted reservoirs near the Moomba oil and gas gathering and processing complex, which serves the onshore Cooper and Eromanga basins. Santos operates Moomba CCS with a 66.7 percent stake. Beach Energy Ltd., also a local oil and gas exploration and production company, holds the remaining interest.

Santos said the 2040 carbon storage target is equivalent to about 50 percent of its 2023 Scope 3 emissions — emissions from the use of its products.

“The target is ambitious and subject to substantial engineering, finance, commercial and policy work to establish enabling frameworks with customers, governments, regulators and other stakeholders”, it said. “The potential projects that would enable achieving the target remain at an early phase of planning and commercial and economic viability is still to be confirmed”.

Shareholder Return Target

Santos unveiled the carbon storage target when announcing a new capital allocation that aims to return at least 60 percent of all-in free cash flow to shareholders starting 2026.

Santos expects “a period of major capital investment to bring significant new production online from the Barossa and Pikka projects”. The Barossa gas field project, now 84 percent complete with the start of production expected in the third quarter of 2025 according to Santos, secures a new source for Darwin LNG, which had been supplied by Timor-Leste’s depleting Bayu-Undan field. Meanwhile the Pikka oil field in Alaska is expected to go onstream 2026, with the first phase targeting reservoirs with estimated proven and probable reserves of 397 million barrels gross (165 million barrels net for Santos).

In 2027 Santos expects its production to have grown over 30 percent compared to 2024 thanks to Barossa and Pikka. The increase will “significantly” lead to lower unit production costs, which in turn “will support strong free cash flow generation throughout the commodity price cycle”, managing director and chief executive Kevin Gallagher told Santos’ Investor Day in Sydney.

New PNG Production at Angore

Simultaneously Santos announced the start of production at the Angore project in Papua New Guinea’s (PNG) Hela Province. The project serves PNG LNG with up to 350 million cubic feet per day of natural gas.

PNG LNG started production April 2014. The Exxon Mobil Corp.-led consortium expects to produce over 11 trillion cubic feet of LNG over the project’s life. The U.S. energy major operates PNG LNG through ExxonMobil PNG Ltd. The other co-venturers are JX Nippon Oil & Gas Exploration Corp. and PNG’s state-owned Kumul Petroleum Holdings and Mineral Resources Development Co. Ltd.

“Completion of the Angore development unlocks a one trillion cubic feet natural gas resource to supply PNG LNG for years to come”, Santos said in a separate press release.

To contact the author, email jov.onsat@rigzone.com