WA: Gorgon to lead nation's biggest carbon injection effort

AAP General News (Australia)
08-21-2009
WA: Gorgon to lead nation's biggest carbon injection effort

By Andrea Hayward

PERTH, Aug 21 AAP - A pioneering geosequestration effort will go hand in hand with
the nation's biggest-ever resource project.

ExxonMobil has already agreed up $75 billion worth of contracts to supply India and
China with liquefied natural gas (LNG) from the Chevron-led Gorgon project at Barrow Island,
off Western Australia's Pilbara coast.

And that accounts for just a quarter of the development's potential output of 15 million
tonnes of LNG per year.

Economic consultants estimate the Gorgon development will be worth $33 billion in sales
of locally made goods and services, and generate government revenue of almost $40 billion
over the first 30 years of its operation.

It would boost Australia's gross domestic product (GDP) by $64.3 billion over the same
period, creating 6,000 new jobs during the construction phase and around 3,500 thereafter.

But the project comes with an unwanted legacy - millions of tonnes of carbon dioxide
which must be separated during the process.

It's estimated that for every million tonnes of gas extracted there will be an average
70,000 tonnes of CO2.

When the plant is running at capacity, Chevron plans to inject about 3.5 million tonnes
of CO2 each year into rocks 2.3 kilometres below Barrow Island, through three or four
wells on the surface of the A Class Reserve.

The plan is to sequester 120 million tonnes per annum (mtpa) over the life of the project,
storing the gas in a huge underground reservoir measuring up to five kilometres in width.

Estimated to cost more than $1 billion, it will be the biggest project of its type
ever undertaken, although BP is preparing for a larger scale carbon geosequestration project
in Alaska.

The process involves injecting the carbon dioxide into the porous space of the rocks,
in which the CO2 is trapped, pushing the water contained in the rocks further out of the
reservoir.

In Victoria, the technology has been successfully trialled at the Otway gas project,
where the CO2 Co-operative Research Centre (CRC) has successfully injected 60,000 tonnes
of carbon dioxide into an underground reservoir.

The process is successfully used commercially in Norway in the North Sea, but is not
well understood by the broader public.

CO2 CRC chief executive Peter cook said the Otway project had given researchers a lot
of confidence a larger scale project such as Gorgon was achievable.

He said Chevron had done a lot of drilling, understood the rocks pretty well and had
identified a number of seals above the reservoir into which the CO2 would be pumped.

"It's important to realise that you are not actually putting the CO2 into a great big
cavern. It's not into a cavern, it's into a very porous rock," Dr Cook said.

Careful monitoring during the injection period would allow Chevron to understand how
the reservoir was behaving and use the history of the behaviour to extrapolate what would
happen over hundreds of years, Dr Cook said.

"We do understand that the rocks can hold it," Dr Cook said.

"The same rocks hold gas and oil for millions of years.

"It's not actually going to whiz off."

Curtin University petroleum engineering head Brian Evans, who was involved in the first
phases of the Gorgon due diligence review, said Gorgon's carbon geosequestration would
be deeper than any other reservoir.

He said it would surpass the 1mtpa injected in Norway at the Snohvit project in the North Sea.

While there was confidence the technology works there could always be surprises, Prof Evan said.

"There's always ifs and buts. The biggest if is what if the CO2 gas finds a fault which
was unexpected?" he said.

"But then Chevron have found a control in terms of monitoring the CO2 that might move
and have systems in place to push it down through the fault, so to speak, using pressure.

"If you get a sudden leak of gas through a fault which is unexpected all you have to
do is increase the pressure of the water within that fault that the gas is replacing and
the water, because it's heavier than the gas, pushes the gas back down from where it came.

"We don't like that practice and the reason for it is that it means that you didn't
really know your reservoir.

"Well, no one is saying that you know your reservoir 2.3km down there."

Barrow Island has a number of nearby geological faults, the largest one, the Barrow
Fault, has leaked hydrocarbon sometime in the last 10,000 years.

Chevron are understood to be steering clear of the Barrow Fault just in case.

The fault also seals a billion barrels of oil below Barrow Island's surface.

Prof Evans said fail safe systems were in place to deal with any "surprises".

"Within the bounds of being able to handle some surprises we feel, generally, the industry
feels it can handle these surprises and have systems in place to do this," he said.

"The confidence is there. This is a stable treatment."

Chevron, which has already invested $150 million on investigating and developing the
injection project, says the cost per tonne of sequestering CO2 is less expensive than
the alternatives.

Curtin Business School Professor of Energy Economics Ronald Ripple says the cost of
the sequestration component of the project is "significant".

"But when you think about the magnitude of this project it doesn't seem to be disproportionately
large," Prof Ripple said.

He said the Gorgon sequestration project would be different to a lot of similar schemes
around the world.

"From that perspective the project at Gorgon is a major environmental step forward
in that they are not simply going to produce and vent, they are going to capture the CO2
and store it," he said.

The sequestration project notwithstanding, WA Environment Minister Donna Faragher has
signed off on the final environmental approvals for the Barrow Island development, and
federal Environment Minister Peter Garrett's decision appears to be a fait accompli.

Chevron and its joint venture partners ExxonMobil and Shell are set to make an investment
decision by the end of the year.

Mr Garrett's decision will be announced by September 8.

AAP ah/was/ash/cdh

KEYWORD: NEWSCOPE WA (AAP NEWS ANALYSIS) RPT

2009 AAP Information Services Pty Limited (AAP) or its Licensors.