Exxon abandons Gippsland basin CCS project, but doesn’t say why

Exxon Mobil has spiked a proposal to store captured carbon in an old offshore gas field in the Gippsland basin off the coast of Victoria, but isn’t explaining why it’s killed the three-year old idea.

The oil major’s local subsidiary has been working with its partner Woodside on the South East Australia Carbon Capture Hub project since 2022, and put it into the federal environment approvals queue in 2023.

The project sought to store captured carbon in the Bream oil and gas field, which stopped production five years ago. The field would have been fed by a pipeline from the Longford gas plant heading off the coast near Golden Beach, and is tucked inside the Gippsland offshore wind zone.

Esso and Woodside undertook gas re-injection when it was operational, a process that maintains enough pressure underground to allow natural gases to continue flowing. That, and the nature of the formations led Geoscience Australia to suggest the Bream field could be used for carbon capture and storage (CCS).

Exxon has not given a reason why the project was cancelled, saying only that the Bream A platform isn’t needed to support “any CCS project” so it will be decommissioned.

“We continue to explore opportunities to utilise the Bream reservoir for CCS, as well as screening other larger gas fields and associated infrastructure still involved in producing gas for Australia’s east coast,” according to emailed comments from an Esso Resources Australia spokesperson, the oil major’s subsidiary.

Injection rates for SEA CCS, as the project was dubbed, were forecast at an average of 0.5 million tonnes per annum (Mtpa) up to a maximum of 3 million tonnes, according to a brief outlined on the EPBC website.

The idea was to use the same infrastructure used during the reservoir’s life as a gas field, including pipelines and ocean equipment, with appraisal activities set to make sure these were in working order and appropriate for injecting compressed carbon. 

Appraisal activities would have started in the second half of this year and operations would last between seven and 10 years, according to documents issued by Exxon Mobil in July last year. 

Is it still worth trying

The Australian government is planning to offer oil and gas companies 10 CCS permits to facilitate offshore exploration.

The decision to halt the SEA CCS project before appraisal calls into question the viability of these kinds of projects in depleted oil and gas fields generally, says IEEFA energy finance analyst Kevin Morrison. 

“It would be good to know [why] so the industry can understand more about the challenges of developing and operating a CCS project, as it is not as easy as some promoters of the process make out,” Morrison wrote on LinkedIn

“It will be interesting to see what happens to other proposed CCS projects in the Gippsland basin, and it also begs the question if a relatively small scale project like this can’t make the grade how does a CCS project that is more complicated from an engineering perspective such as Santos Ltd’s Bayu Undan CCS project get developed.”

CCS has been a favourite of the fossil fuel industry, which promised significant gains to allow business-as-usual oil and gas extraction. 

But the examples to date show that the reality is much more difficult to achieve. 

Chevron’s Gorgon CCS project collected just 1.6 million tonnes of CO2 equivalent in the 2024 financial year, when it was supposed to be collecting 4 million tonnes. 

Extra carbon offsets to manage the shortfall as well as the cost of trying to bring the system up to speed is now costing the company billions each year.

In 2023, IEEFA highlighted problems at the two original CCS projects, Norway’s Sleipner, which has been running since 1996, and Snøhvit, running since 2008, where geology caused significant reductions in available storage capacity.

US publication Drilled found that oil and gas companies are well aware that CCS won’t work, during an investigation last year.