Is Santos' proposed Bayu-Undan CCS project a Pipe Dream?

An expert warned about significant hurdles that the project may face.

Santos' plan to convert the depleted Bayu-Undan gas field into a regional carbon sink appears increasingly unattainable, according to the Institute for Energy Economic and Financial Analysis (IEEFA). 

“The project presents many legal and regulatory risks,” said Kevin Morrison, IEEFA Energy Finance Analyst, Australian Gas. 

Some of the risks he cited were approvals for an offshore project proposal and environmental impact statement, as well as permits to build facilities in Timorese waters and permission to ship carbon across maritime borders. Parties involved should also consider international regulations, address technological challenges, and manage potential liabilities.

“The legal and technical challenges of transporting and storing CO2 indefinitely are significant, and investors and regulators need detailed information from Santos on how it will deal with these issues,” Morrison said.

The technical uncertainties surrounding the Bayu-Undan CCS project raise concerns about its viability and ability to meet Santos' emissions obligations under the Safeguard Mechanism, potentially impacting Australia's 2030 emissions reduction targets, he added.

Santos plans to commission the Bayu-Undan CCS project by 2028, purchasing carbon credits in the meantime. Whilst initially focusing on capturing CO2 from the Barossa field, Santos aims to expand the project into a regional hub for storing waste CO2 from countries like South Korea and Japan.