Carbon pollution from Inpex's Ichthys LNG project has exceeded allowed emissions by 10 per cent, enough to cancel out the emissions savings from 1.7 million Australian solar panels.
Emissions from Australia's dirtiest offshore LNG project are likely to rise, and Inpex has reversed its opposition to carbon capture and storage that has proved unreliable at Chevron's Gorgon LNG.
Ichthys emitted the equivalent of 7.62 million tonnes of CO2 in the 12 months to June 2020, according to corporate emissions data released by the Clean Energy Regulator yesterday.
Ichthys is allowed an emissions baseline of 6.95 million tonnes under the Clean Energy Regulator's safeguard mechanism.
The $US45 billion ($57.4 billion) project produces gas offshore the Kimberley that is piped 890km to an 8.9 million tonnes a year LNG plant in Darwin.
Gas first flowed from the wells in July 2018, and the initial LNG cargo sailed for Japan in October 2018. Emissions for the 12 months to June 2019 were 6.23 million tonnes.
An Inpex spokesperson said the Ichthys project was in the early stages of operation.
LNG projects often have higher emissions in the early stages of operation, mainly if frequent shutdowns cause large amounts of gas to be flared.
"Ichthys LNG features high energy efficiency technologies to minimise greenhouse gas emissions over its operational life," the spokesperson said.
Ichthys does use a combined cycle gas plant for its Darwin power station that is more efficient than the open-cycle gas turbines used at most LNG projects.
However, the carbon intensity of Ichthys LNG is far greater than any other project using gas from Australian waters when environmental approval submissions are compared.
If Ichthys achieved its stated production capacity of 8.9 million tonnes a year of LNG in 2019-20, then its product's actual carbon intensity was 0.86 t CO2e for each tonne of LNG exported.
Ichthys' emissions are driven up by the 8% CO2 in the reservoir vented at Darwin and massive volumes of gas burnt offshore to push gas through its 890km-long pipeline.
Ichthys carbon footprint likely to grow
Three factors are likely to push Ichthys emissions higher.
Boiling Cold understands late this year Inpex will trial the project running at 110% capacity, and if that is successful Inpex will test operations at 115% capacity.
Design is underway for a booster compression module for the Ichthys Explorer central processing facility that will increase offshore processing emissions.
After about 15 years of production from the Brewster field with 8% CO2 will decline and be replaced with the Plover field containing 17% CO2. The Ichthys Greenhouse Gas Management environmental submission estimates this will add about 1.6 million tonnes a year to the project's carbon pollution.
Inpex has to deal with Ichthys' appalling emissions over two time frames.
The immediate problem is breaching the safeguard mechanism baseline.
The Inpex spokesperson said Ichthys has approval for a multi-year monitoring period. The Clean Energy Regulator will judge its emissions over three years to June 2022, not on annual figures.
Australian Carbon Credit Units will need to be purchased for any emissions above the baseline.
"Ichthys is already originating ACCUs through a bio-sequestration project in southern WA and savannah fire management projects in the Northern Territory," the spokesperson said.
"These credits will be surrendered as required to meet any residual offset requirement in 2022."
U-turn on carbon capture and storage
Longer-term Ichthys faces the near certainty of both being disadvantaged in the market for the high carbon intensity of its LNG and facing some form of financial cost for its carbon emissions.
"Inpex recognises climate change as a critical business issue," the spokesperson said.
Inpex is investigating the feasibility of carbon capture and storage at its Darwin LNG plant.
"The recent global wave of commitments to 2050 net-zero carbon society has opened up the way for collaboration, innovation and funding for CCS," the spokesperson said.
"We recognise CCS is a critical component of the energy transition."
In January, Inpex committed to net-zero emissions by 2050 and a 30 per cent emission reduction by 2030, with its largest asset Ichthys a priority.
"This is a gigantic project and…we aim to make the LNG as clean as possible and will engage in carbon capture and storage initiatives," Inpex chief executive Ueda said at the time.
Inpex's move came three months after the Japanese Government adopted a net-zero by 2050 target.
The embrace of CCS is a stark turnaround from an Inpex submission to the Productivity Commission in November 2019.
"To date, Ichthys LNG has spent over $10 million evaluating CCS as an abatement option," the submission stated.
"While there may be no technical barriers to implementation, the cost of CCS is very high with a break-even carbon price of around $100/t carbon dioxide equivalent or more.
"Therefore, implementation of CCS cannot be commercially justified at this stage."
The easiest CCS opportunity at Darwin is the storage of reservoir CO2 as it is already separated before the gas enters the LNG plant. Even if all reservoir CO2 were buried, Ichthys LNG would likely still be the most carbon-intensive offshore LNG project in Australia.
Chevron's system to store Gorgon's reservoir CO2 under Barrow Island has cost $3.1 billion to data and is currently operating at just one-third of its design capacity due to technical problems.
Storing emission from onshore processing is even more challenging. Separating CO2 from combustion gases is expensive, complicated, and requires substantial amounts of power that drive emissions up further.
The Ichthys project is operated by Inpex that has a 66% stake. Other owners are French Total (26%), Taiwan's CPC (3%) and small stakes from five Japanese utilities: Tokyo Gas, Osaka Gas, Kansai Electric power, JERA and Toho Gas.
Solar panels / emissions equivalence calculations
- Ichthys has a safeguard mechanism baseline of 6,952,477 tonnes a year of CO2e.
- 2020 emissions of Inpex Holdings Australia Pty Ltd, ultimate controlling corporation the Ichthys project, had corporate emissions of 7,623,682t CO2e in 2020: 671,205t CO2e more than the baseline. IHAPL controls no other projects in Australia.
- WA Water Corporation equates 45,000 rooftop panels with saving 18,000t of CO2e a year.
- Number of solar panels to save the emissions above baseline of Ichthys = 671205 x (45000/18000) = 1.678 million.