Power Up: Santos’ Federal Court blow is a warning sign for oil and gas approvals
Oil and gas companies may have been put on notice that approvals for their big ticket projects might be subject to far greater scrutiny after the Federal Court rejected approvals for Santos to carry out certain drilling and completion activities for its Barossa gas project.
The court overturned the National Offshore Petroleum Safety and Environmental Management Authority’s (NOPSEMA) approval after finding that the gas major had failed to consult Tiwi Islands’ Traditional Owners, forcing the company to suspend drilling activities pending a favourable appeal or approval of a fresh Environmental Plan.
Barossa is no stranger to controversy thanks to its high CO2 content, which represents about 18% of its total gas content, with even former owner ConocoPhillips flagging that the project would produce a staggering 1.5t of CO2 for every tonne of liquefied natural gas produced.
And while Santos has claimed that its carbon capture and storage project at the Bayu Undan field would be ready in time to capture Barossa’s CO2 content, the example of Chevron’s underperforming Gorgon CCS project doesn’t exactly fill one with confidence.
More broadly, the ruling is one of very few successful lawsuits brought against oil and gas projects on environmental grounds that have succeeded in Australia.
This might be a one off or it might reflect a growing trend that would certainly give developers pause and put a smile on the face of your local environmental lobbyist.
It’s certainly worth keep a close eye on the two separate legal challenges facing Woodside Energy Group’s Scarborough gas project at the very least.
And that’s without considering the Australian Greens promise to push for amendments to the safeguard mechanism, which penalises big polluting companies that go over a set carbon emissions ceiling, or their likely move to get the government to tighten up environmental regulations.
That’s likely to have some teeth to it given their move to support the passing of the Albanese Government’s 43% emissions reduction target into law.
Rather coincidentally, Woodside has signed the Aiming for Zero Methane Emissions Initiative, joining major companies such as Aramco, Chevron, CNPC, Eni, ExxonMobil, Repsol, Shell and TotalEnergies who seek to significantly reduce their methane emissions.
Methane is the second largest contributor to climate change after CO2. While less methane is released into the atmosphere compared to CO2, it has a significantly greater greenhouse impact pound for pound.
However, while the company frames its participation in the initiative as crucial to delivering on its plan to reduce Scope 1 and Scope 2 greenhouse gas emissions by 15% by 2025 and 30% by 2030, it actually looks like a case of reaching for low-hanging fruit.
By its own admission (in the same release no less), Woodside said its historical focus on managing methane emissions meant that it was already at less than 0.1% of its production by volume – well below the 0.2% target set by the initiative.
What this means is that joining the initative will do little to actually help the company reduce its greenhouse gas emissions and that any such reductions will have to come from elsewhere.