Pilot closes in on regulatory approval for Mid West CCS project

Pilot Energy is on the homestretch to receiving approval in the coming months from the Australian government for its Cliff Head oil field in WA’s Mid West to be converted into a greenhouse gas storage location.

Pilot Energy (ASX:PGY) is powering ahead as it works towards converting its end-of-life Cliff Head oil field into a clean energy project, starting with the stage one carbon capture and storage (CCS) project.

The company has checked off several boxes recently including acquiring Triangle Energy’s (ASX:TEG) majority interest in Cliff Head, clearing the pathway for the CCS development project, and bringing in several strategic and financial partners to create a ‘one-stop-shop’ for CCS.

Pilot lodged its application to the National Offshore Petroleum Titles Administrator (NOPTA) to have Cliff Head declared as an identified greenhouse gas storage formation late last year.

The submission was the first to be made under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Greenhouse Gas Injection and Storage) Regulations 2011.

Since then, Pilot has announced partnerships with Canada’s Svante Technologies – a Global Cleantech 100, Australian carbon technology developer KC8 Capture Technologies, Norway-based CO2 shipping company Knutsen NYK Carbon Carriers (KNCC) and US-based leading international full-service net-zero solutions provider 8 Rivers Capital.

While Pilot’s immediate focus is on helping industry drastically reduce its existing emissions, the CCS project will provide a strong foundation for the eventual production of clean ammonia.

The first stage of the Mid West Clean Energy Project involves converting the operating Cliff Head offshore oil field into a permanent CO2 storage operation capable of storing over 1 million tonnes per annum (Mtpa) of CO2 starting in 2026.

The CCS project will have over 50 million tonnes of potential total storage capacity and will allow for continuous injection through 2050.

This will pave the way for Pilot to ultimately produce over 1.2Mtpa of low-cost, clean ammonia for export while capturing around 99% of the carbon emissions generated.

The injection capacity of Cliff Head places it within the top 10 CCS projects globally.

The interest in the Mid West Clean Energy Project is significant and spans the entire staged development from the CCS through to ammonia production and export.

One of the early deals Pilot executed was with US-based 8 Rivers Capital in July 2022, which not only provided the company with a $1m investment – split equally in cash and in-kind – for project costs, but it also included an option for ammonia supply to 8 Rivers once the project reaches production.

8 Rivers has patented technology to produce clean electricity and blue hydrogen with over 99% CO2 captured in an innovative way and at low cost. CCUS is recognised as a key technology for carbon neutrality by removing CO2 from industry.

8 Rivers is backed by SK Materials, a member of the SK Group in Korea, having invested US$400m to back the development of the 8 Rivers technologies and to acquire management rights in the company. Through 8 Rivers’ continuing investment in Pilot, 8 Rivers is a substantial shareholder of the company.

Recently, SK Materials has been strengthening its clean energy business and plans to expand its markets to the global stage after completing commercialisation technology by promoting clean business after entering into a heads of agreement with ExxonMobil for the production of blue ammonia earlier this year in February.

This article was developed in collaboration with Pilot Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.