Burying pollution tested with $1.5 billion project in Australia

Burying pollution tested with $1.5 billion project in AustraliaThe idea that significant amounts of greenhouse gases can be buried underground will be tested soon at a remote island off northwest Australia, where oil companies led by Chevron Corp. are poised to inject pollutants 2 kilometers (1.25 miles) into the Earth’s crust.

The A$2 billion ($1.5 billion) carbon capture and storage project at Barrow Island about 37 miles off the coast will be the biggest of its kind when it starts by next year. It’s part of the gigantic Gorgon liquefied natural gas development, which began production last month after $54 billion of investment and will run for four decades.

So-called CCS plants are crucial to holding back climate change, accounting for a seventh of the emissions reductions the International Energy Agency says are needed to keep the planet from overheating. While the Barrow CCS project will be a milestone for the effort to sequester greenhouse gases, it also highlights the difficulties of the technology. It wouldn’t have happened without the government pushing it, stepping in with A$60 million in funds and vowing to assume long-term liability should any of the gas escape.

“It doesn’t happen without the government doing something,” said Tony Wood, director of the energy program at the Grattan Institute research group in Melbourne and an adviser to governments in the region on clean-energy technologies at the Clinton Foundation until 2014. “You can either put in place a carbon price, throw money at it as a government or you can regulate it. In this case, they effectively chose the third.”

The Western Australian government insisted on Barrow CCS as a condition of approving Gorgon, whose developers also include oil majors Exxon Mobil Corp. and Royal Dutch Shell Plc. At the time the investment decision was made in 2009, the government was planning to introduce a carbon trading system that would have underpinned the economics of the project. The development will inject as much as 4 million tons of carbon dioxide per year at Barrow Island, reducing Gorgon’s emissions by 40 percent.

“It is still early days for these types of projects, and they are costly,” John Watson, Chevron’s chief executive officer, told reporters in Perth on April 12. “So the ultimate application of these technologies will be their competitiveness.”

The number of large carbon capture facilities operating may rise to 22 by next year from 15, according to the Global CCS Institute, an industry group that seeks to encourage development of the technology. Another nine projects are in advanced stages of planning. New facilities are scheduled to begin in the U.S., Canada and Abu Dhabi.

Source: Bloomberg
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