The draft of a decision to be made in July tells the Australian Government to remove polluting industries - such as Woodside's North West Shelf plant - from the area.
The company that thinks a damaging oil spill from its planned drilling near Scott Reef is "only a mere theoretical possibility" weeks ago accidentally released a cocktail of hydrocarbons, chemicals and water into the Indian Ocean.
Santos aims to end gas production from its Bayu Undan project in the Timor Sea this week and plans to use it to store CO2 under the seabed, which would allow it to delay an enormous decommissioning bill.
A formal end to production planned for about this Friday was communicated to Santos staff last week.
A Santos spokeswoman said it was working with Timor-Leste authorities to repurpose Bayu-Undan for Carbon Capture and Storage (CCS).
If CCS is not viable, Santos and its partners will have to decommission the platforms in Timor-Leste waters and the pipeline to Darwin that Australia regulates.
Offshore gas in northern Australia. Source: Santos with annotation by Boiling Cold
Bayu Undan has been the mainstay of Timor-Leste's economy for two decades since US major ConocoPhillips started producing oil and later gas from the field 500km northwest of Darwin.
Santos took control in 2020 when it acquired ConocoPhillips' northern Australian assets: the Bayu Undan offshore facilities in Timor Leste waters, a gas pipeline to Darwin, the Darwin LNG plant, and the then undeveloped CO2-rich Barossa gas field.
At the time, the Bayu Undan field was due to stop production in 2022, and Santos planned to get value from its $US1.465 billion ($2.25 billion) purchase by exporting Barossa gas through the Darwin LNG plant.
A pipeline from Barossa would connect to the existing Bayu Undan pipeline to get the gas to shore.
That plan required the 18 per cent CO2 content of the Barossa field to be vented offshore, making Barossa LNG Australia's most carbon-intensive gas export by a wide margin.
Those emissions were accepted by Australia's environment regulators, but were problematic for companies that Santos wanted to sell gas or project equity to.
In response, Santos pursued storing the CO2 in the Bayu Undan field after production was finished.
Gas and CO2 would be piped to Darwin processing the gas for export and the CO2 would be piped to Bayu Undan using the existing pipeline.
To keep open the option of storing CO2 later, Santos added $622 million ($953 million) to the cost of Barossa to allow the new pipeline to go all the way to Darwin and leave the existing Bayu Undan pipeline for CO2 transport.
When Santos first examined Bayu Udan CCS the economic returns were poor.
According to a confidential Santos 2021 study, for CO2 storage at Bayu Undan to be economically viable, the company needed to store not just the 2.3 million tonnes of CO2 a year from Barossa but also another four million tonnes from the Ichthys project.
Another possible customer for carbon storage at Bayu Undan was ENI, which in 2023 revived plans to develop the Evans Shoal gas field with a huge 27 per cent CO2 content. However, the Italian firm put the project on the back burner 12 months later.
Santos has almost completed the front-end engineering design for Bayu Undan CCS.
If the work does not reveal a way to develop Bayu Undan CCS economically with just the CO2 from Barossa, then Santos has unnecessarily spent about $1 billion to extend the Barossa pipeline all the way to shore and faces a $1 billion-plus bill to decommission Bayu Undan.
I worked in oil & gas in commercial and engineering roles for 20 years. Since 2016, I have written for The West Australian, WAtoday and Boiling Cold, winning five WA Media Awards.
The company that thinks a damaging oil spill from its planned drilling near Scott Reef is "only a mere theoretical possibility" weeks ago accidentally released a cocktail of hydrocarbons, chemicals and water into the Indian Ocean.
Peter Milne
