Expensive failure: Flagship Gorgon CCS collects less CO2 in worst year

The Gorgon carbon capture and storage (CCS) project is performing worse than ever and it’s costing owner Chevron a fortune to manage.

The Gorgon gas field off the coast of Western Australia was approved on condition the CCS project could and would capture 80 per cent of the CO2 emitted, or 4 million tonnes a year.

What it actually achieved in fiscal 2024 was just 1.6 million tonnes of CO2 equivalent. 

That figure is just 30 per cent of what it’s supposed to collect and the lowest performance since it started in 2019, according to an IEEFA analysis of Chevron’s latest environmental report for the CCS operation.

The analysis shows the project is becoming an expensive boondoggle, costing the oil major almost $1 billion more in 2023 than it did in FY2019-20 to offset the difference and pay for technical problems.

But with the oil major posting a $14.4 billion profit in the first nine months of 2024, the extra fees incurred from its failing CCS project may simply be the cost of doing business.

The cost of underperformance – the requirement to buy carbon offsets – and problems with the reservoir the CO2 is supposed to be injected into, rose from $2.5 billion in FY2019-20 to $3.2 billion in 2023.

And that means the cost per ton of CO2 captured is now on average $200, compared to the $70 originally estimated – not including some 10 million carbon offsets required to deal with the shortfalls.

At current spot prices, Australian Carbon Credit Units are priced around $40 a tonne.

“The key reason behind Gorgon’s underperformance is issues with the reservoir pressure, which has to stay within a certain range,” wrote IEEFA CEO Amandine Denis-Ryan and gas finance analyst Kevin Morrison.

“As a result, the pressure of the CO2 injection system has had to be constrained. In order to mitigate those issues, Chevron has implemented measures to remove water found in the reservoir and reduce the reservoir pressure. They have built a number of water producing and injection wells, as well as water processing infrastructure.”

CCS still doesn’t work

The failure of Gorgon, the largest attempt to date at a CCS project, is indicative of how the whole industry has been found wanting. 

Gorgon has never hit the 80 per cent benchmark: between 2019 and 2024 Chevron only managed to inject 10 million tonnes of greenhouse gas GHG carbon dioxide equivalent [CO2e] into the reservoir. 

And last year, IEEFA highlighted the problems at two long-running Norwegian carbon capture and storage (CCS) projects, Sleipner, which has been running since 1996, and Snøhvit, running since 2008.

Both are held up as the success stories of CCS but the geology at both sites have caused significant reductions in the volume of storage capacity available.

The reason their owner Norwegian state-owned energy company Equinor ASA fixed the problems at both sites is because of Norway’s high CO2 emission tax.

These are the only two success stories of 13 CCS projects reviewed around the world.

And yet oil and gas companies are well aware that CCS won’t work, found an investigation by US publication Drilled this year.

In spite of the wholesale lack of success, the Australian government is planning to offer oil and gas companies 10 CCS permits to facilitate offshore exploration.

One of these could be to Santos’ Bayu-Undan CCS project, a proposal that is more complex than the Gorgon CCS, say Denis-Ryan and Morrison.

“It involves moving CO2 through almost 800km of pipelines and across maritime boundaries, compared with Gorgon’s 7km pipeline.

“The new Gorgon CCS data also comes just as the Western Australian government revealed an ambitious vision and action plan for the state to become a global leader in carbon capture, utilisation and storage (CCUS) for the state.”