Charm offensive on Aussie carbon dump for net-zero Asia

Snakes, turtles and geckos co-exist on the island off the north-west of Australia with the predatory perentie, an almost two-metre long dragon lizard, one of which stops a busload of hydrocarbon executives as it saunters across the road to the airstrip.

Korean visitors to the $50 billion Gorgon complex, linked to vast offshore fields, are there to see for themselves how sequestering carbon deep underground can extend the use of gas for decades and get heavy industry off coal.

Designed to operate for 50 years, Gorgon is the largest single resource project in Australia's history and exports liquefied natural gas to North Asia as well as supplying domestic gas to Western Australia.

Run by fossil fuel giant Chevron for joint venture partners ExxonMobil and Shell, the facility can produce 15.6 million tonnes per year of LNG, 300 terajoules per day of domestic gas and 20,000 barrels per day of condensate.

More than 1500 LNG cargoes have been delivered since first production in 2016 to customers across the Asia Pacific, including Japan, China and South Korea.

Home to the world's biggest carbon sink, as well as skinks, Chevron says Gorgon has so far injected more than 9.5 million tonnes of emissions, with more than 100 million tonnes forecast over the life of the system.

Vice-president Chris Powers said his new energies division was lowering the carbon intensity of Chevron's operations and building up carbon capture utilisation and storage (CCUS), renewable fuel and hydrogen production.

"It starts with efficiency, then new technologies to reduce emissions ... carbon capture is one of those technologies," he said on Barrow Island.

Gorgon won environmental approvals based on plans to inject up to four million tonnes of carbon dioxide per year into the Dupuy Formation, a geological layer more than two kilometres beneath the island.

But it is running at one third of the promised pace.

Environmental groups have accused Chevron of mismanaging the taxpayer-subsidised $3.5 billion carbon sequestration project, which has staggeringly high costs per tonne of carbon injected.

But Mr Powers, flown in from Houston for the charm offensive on CCUS, said initial projects always cost more, and the cost would come down as others were developed, similar to wind and solar technologies.

He said regulatory frameworks, efficient permitting and the right fiscal settings were needed to make these projects happen.

But there is stiff competition, especially for new hydrogen projects, which may have already ruled out commercial-scale, gas-derived alternative fuels made in Australia.

"That's what all the jurisdictions have to keep in mind as they develop policies. We think it's important not to pick winners and losers ... and let the best projects move forward," Mr Powers said.

He said carbon capture was also vital for chemicals, cement, and steel, which were energy-intensive industries that were difficult to electrify or hard to change to a different fuel mix.

"We can work together with those emitters to put carbon capture systems on their facilities, capture the CO2, move it into a medium that we can transport it to the appropriate geologic sinks and store it safely," he said.

For the federal government, no new gas projects are getting the go ahead without carbon capture and storage (CCS).

"Carbon capture and storage hasn't got the best reputation," Resources Minister Madeleine King told the Australian Energy Producers conference in Perth.

Although progress had been disappointing, it remains a vital technology, she insisted.

Australia is one of the world's top three LNG exporters, along with the United States and Qatar. Longer-term, carbon management services are envisaged under laws recently passed to enable the nation to bury emissions for its friends and allies.

Industrial heavyweights were already examining the feasibility of capturing carbon in Japan and transporting it to Australia for storage in the Bonaparte Basin, off the north-western coast of the Northern Territory, or the west's Carnarvon Basin.

The next step will be bilateral agreements for the new trade, Department of Climate Change and Energy division head Shane Gaddes told a Senate estimates hearing on Tuesday.

But the technology won't necessarily be a green light for all fossil fuels.

The Queensland government recently blocked coal giant Glencore's proposed demonstration plant in the Surat Basin.

Glencore said the decision left the resources industry with no credible abatement solution, which meant lost jobs and a hit to regional communities.

Federal agriculture minister Murray Watt said he was concerned about the potential impact of a CCS project on the Great Artesian Basin.

"This so-called technology hasn't significantly reduced emissions anywhere in the world, and this project wouldn't have either," Queensland Conservation Council director Dave Copeman said.

"Carbon capture and storage is a con."

The Barrow plant was granted approval by then WA premier Colin Barnett in 2009, with world-first legislation regulating the controversial technology.

Despite low injection rates, additional wells and subsea infrastructure within the Gorgon field near Barrow Island and the Jansz-Io gas fields located 200 km offshore in water depths of 1350 metres were approved two years ago to supplement the initial wells and pipeline.

Meanwhile the world is yet to put a premium on lower carbon LNG from Australia, despite early moves by Japan to develop market prices.

Japan is also working with Santos in the Cooper Basin on large-scale, commercial carbon capture and storage, and a low-carbon fuels hub, and plans to subsidise producers for 15 years to sell "clean hydrogen" at the same price as fossil fuels.

"To date, we don't see a green premium in the marketplace," Chevron Australia's general manager of energy transition David Fallon told AAP.

"We would like to see customers who are willing to pay more for it and then that would actually incentivise the producers to up their game and reduce their emissions further."

Chevron's operations are also covered by the federal safeguard mechanism regime that requires big emitters to purchase carbon credits or cut emissions from production processes, or cop a fine of $250 per tonne above the LNG plant's emissions limit.

"As our safeguard mechanism and as our Western Australian greenhouse gas conditions become increasingly applied to us, we'll either be looking to do technical abatement and/or purchase offsets to comply with those requirements," he said.

While Santos' plans involve hard rock, the Chevron engineers struck sandstone when injecting carbon, which began to create sand and clogged the system at the flagship CCS project and forced the emissions into the atmosphere.

"It's vented, but we do purchase carbon offsets to make good that difference," Mr Fallon said.

Water wells are being overhauled to make them more resilient to the sand that is produced and increase the carbon storage rate.

He said it is going to take time to fix but it is not a "failure".

The reporter travelled to Barrow Island with the support of Chevron Australia.

Australian Associated Press