Adelaide Advertiser
Thursday 5/3/2009 Page: 3
Santos' Moomba project remains a future commercial opportunity.
OIL and gas giant Santos has effectively shelved a groundbreaking project to store huge quantities of carbon dioxide underground in South Australia's Outback. The company said yesterday it had put its Moomba carbon storage project "under review". The move is a blow to environmental hopes carbon sequestration would provide a quick avenue to make major cuts to Australia's greenhouse gas emissions.
Using depleted gas fields at Moomba, Santos had planned to store 20 million tonnes a year of carbon dioxide for 50 years - the equivalent of taking five million cars, or one third of the national fleet, off the roads. It also dashes hopes of job creation on the project, which was costed at more than $700 million for its initial phase. Santos said it had not abandoned the scheme but it was "not a high priority".
Two factors were weighing against it. Firstly, it relied on a high oil price because the concept involved an expensive system of pumping carbon dioxide underground to put remnant oil and gas under pressure for extraction. Secondly, Santos expects only a "modest" price for carbon permits under the Federal Government's pollution reduction scheme. "It relies on a certain oil price and a certain carbon price to make it a viable project," a Santos spokesman said. "We don't have those things at the moment." The Moomba project would use carbon gases captured from coal-fired power stations in the eastern states.
Santos said retrofitting those power stations to burn gas would provide 80% of the benefits of carbon capture but at known costs and without having to rely on experimental technology. Prime Minister Kevin Rudd visited Moomba last September to discuss the project and Santos said it had held encouraging talks with ministers. It was yet to make a formal application for federal funding but consistently has said the project would not be viable without at least $250 million in aid. The project was actively backed by the SA Government.
Mineral Resources Development Minister Paul Holloway said he was "disappointed" but accepted that "deferral of future investment in this multimillion-dollar project reflects the challenges of economic conditions". A spokesman for federal Resources and Energy Minister Martin Ferguson said potential carbon storage sites were still being mapped nationwide. "Santos' Moomba project remains a future commercial opportunity for the company," the spokesman said. Santos said it remained committed to the Cooper Basin which still had a long life.
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