What You Should Know About Offshore and Sour Gas CCS: High Cost, Leak Mitigation, and Transportation

Abstract

Discovered in 2011 offshore the Malaysian state of Sarawak, the Kasawari sour gas field is today a symbol of Southeast Asia’s energy challenge. Petronas is eyeing next year for first gas. By 2025 it hopes to see 900 MMscf/D flowing from the field to its sprawling Bintulu LNG export facility on the Sarawak coast. But what makes the field a regional and industry bellwether is not its natural gas. When peak output is reached, Petronas plans to stop venting and start capturing between 3.7 and 4 million mtpa of the CO2 that will be produced from the project’s wells over the next 2 decades. That’s more than 8% of the greenhouse gas emissions Petronas reported for all of 2020. And in more upstream-friendly terms, the injection target at Kasawari is roughly equal to 77 Bcf of gas each year. Keeping that huge volume of CO2 from ever seeing the light of day will require a dedicated platform that Petronas is in the midst of designing. It will also need a 138-km-long pipeline to send CO2 to a depleted field for permanent storage. And of particular note, this second phase of Kasawari will not just be the Malaysian national oil company’s first such attempt at megascale carbon capture and storage (CCS). With more than twice the planned injection rate of Norway’s Northern Lights CCS that is set to begin in 2024, Kasawari will become the world’s largest offshore CCS project just a year later. The scale of Kasawari is a result of its ranking as one of the most CO2-laden gas fields planned for development globally. When wells are flowing, it’s expected that up to 40% of what will come out will be CO2. But since Petronas has also signed on to become a net-zero emitter by 2050, venting the field’s waste gas won’t be a viable option for long. The sheer scope of the project, and that it is a maiden voyage of sorts for Petronas, has drawn attention to the impact CCS will have on upstream project development costs in Southeast Asia. New research from Rystad Energy suggests that the capital inputs required to add CCS to Kasawari will hike the project’s breakeven gas prices from roughly $3.50/Mcf to more than $5.00/Mcf. The energy consultancy sees a similar case especially for other offshore sour gas projects where CCS will likely be needed to abate production-driven emissions. “Most of these projects are certainly in the study phase still,” said Prateek Pandey, vice president of analysis at Rystad. “But the bigger challenge—more than the technology—is likely to be the economics of these projects and how operators justify the additional development cost with the implementation of CCUS [carbon capture, utilization, and storage] and CCS.”