November 25, 2024 [Oil Price]- BP has struck a deal to develop a natural gas field in Indonesia, complete with a carbon capture system. The deal’s value is seen at $7 billion, with resources to be tapped estimated at 3 trillion cubic feet.
“This project not only unlocks a fantastic gas resource, it also represents an Indonesian first through the use of CCUS to maximise gas recovery,” chief executive Murray Auchincloss said in the news release on the deal.
The carbon capture part of the project would seek to capture some 15 million tons of carbon dioxide during the first phase of the project, with plans for increasing that in the later stages of development.
Natural gas production from the Ubadari field is scheduled to begin in 2028, with the gas to be fed into BP’s liquefaction facility in Indonesia, where the carbon capture and sequestration system would be located.
BP’s partners in the Indonesian gas production and liquefaction business in Papua include China’s CNOOC, and three Japanese energy heavyweights including Mitsubishi Corp., Inpex, and Japan Oil, Gas and Metals National Corp.
Carbon capture has become a top priority for Big Oil majors as they seek to appease climate activists and continue producing oil and gas. In that, they have benefited from government subsidies provided for the purpose of reducing emissions from the extraction of hydrocarbons.
The problem, according to critics, is that carbon capture remains too expensive to make sense as a standard emission-reduction measure. Also, these projects do not always perform as expected. Occidental, for instance, built a carbon capture facility more than a decade ago but it never operated at more than a third of its capacity. However, this has not stopped Oxy from making big plans about direct-air capture that costs billions.
Exxon and Chevron are also investing in carbon capture, which prompted Exxon’s chief executive to warn president-elect Donald Trump to not take an axe to the Inflation Reduction Act, which disburses the carbon capture subsidies.
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