He said advances in CCS technology in the past three years have enabled the company to go “faster and further” on the emissions-reduction front.
“The world still relies on hydrocarbon fuels for 80 per cent of its primary energy, the same as 45 years ago, so to achieve global emissions-reduction goals it is vital that companies like Santos focus on making these fuels cleaner and eventually zero emissions,” Mr Gallagher said in a statement.
“Our targets and road map are consistent with our disciplined, low-cost operating model and our
corporate strategy to build and grow around our five core natural gas assets across Australia, Papua New Guinea and Timor Leste.”
Santos and rival Woodside this year faced shareholder pressure to sign up to tougher emissions-reductions targets covering emissions from their own operations and those caused by customers’ use of their oil and gas, known as “Scope 3” emissions. More than 43 per cent of shareholders defied the board at Santos’ annual investor meeting in April and supported a push by ethical investment campaigners for the company to strengthen its carbon targets.
Mr Gallagher will tell investors on Tuesday the company Santos would actively work with customers of its oil and gas on ways to lower their emissions by 1 million tonnes of carbon dioxide equivalent by 2030.
The company’s strengthened targets come as it nears a final investment decision to give the go-ahead for one of the world’s cheapest CCS projects at its Moomba gas plant in South Australia. After completing the final field trial, successfully injecting 100 tonnes of carbon dioxide into a depleted gas reservoir in the Cooper Basin, Santos is now waiting for the Clean Energy Regulator to finalise the methodology for CCS to qualify for federal carbon credits, which would be needed for the project to stack up economically.
While CCS technology is in its infancy and just 20 projects are in commercial use, it is being increasingly funded by governments and energy companies as part of their decarbonisation initiatives, alongside electrification plans.
Mr Gallagher said customers in China, Japan and Korea were already demanding cargoes of carbon-neutral liquefied natural gas (LNG) after their governments set goals to achieve net-zero emissions around the middle of the century.
“This will require increased use of natural gas to replace coal, as well as new clean fuels such as hydrogen, already being used to reduce emissions from coal-fired power generation in Asia,” Mr Gallagher said.