Chevron plots carbon storage future despite Australia plant setbacks

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Chevron is standing by the performance of one of the world’s largest carbon capture and storage systems at its $54bn Gorgon natural gas project in Australia despite repeated failures to meet targets for trapping carbon dioxide.

Eimear Bonner, Chevron’s chief technology officer, told the Financial Times the oil and gas supermajor was aiming to remove a carbon storage “constraint” at Gorgon, the biggest natural resource project in Australia’s history.

Data published by Chevron last week showed Gorgon’s CCS operation stored only about a third of the total volume of CO₂ it captured in the 12 months to June 2023, because of pressure management issues caused by excess water in its reservoirs.

A huge project situated on a remote island off the coast of Western Australia, Gorgon produces natural gas that is piped to the domestic market and condensed for shipment abroad in liquefied form. It is also the site of one of the world’s biggest CCS systems, which cost $3.2bn to build and is designed to prevent CO₂ emanating from the project from reaching the atmosphere, instead burying it deep underground.

The project has now failed to meet a target of capturing and storing 80 per cent of the CO₂ it produces for a seventh consecutive year. Critics say the persistent setbacks could damp enthusiasm for the technology, which the Intergovernmental Panel on Climate Change says is necessary for the world to achieve climate goals in the Paris Agreement.

But Bonner, who will take over as Chevron’s finance chief next year, told the Financial Times the technology used to inject CO₂ into underground reservoirs was working “very well” and said the subsurface challenges encountered at Gorgon had not dimmed the company’s goal to become a leader in the sector.

“We’re getting terrific insights into what might be involved in scaling and driving the best effect of the storage and reservoirs going forward,” she said in an interview in Houston.

“We have got to be able to take more water out of the reservoir, and so there are plans to pull more water out with some additional drilling and surface equipment . . . In a couple of years, we’ll have that constraint removed.”

When Chevron won approval for Gorgon it promised to store 100mn tonnes of CO₂ over the project’s lifetime and become a standard-bearer for CCS technology and the industry’s dream of continued gas production in a carbon-constrained world. But the project ran into trouble early on when the company detected excess water entering its pipeline and injection well facilities — a corrosion risk that led to a three-year delay to its start up.

The project’s inability to meet regulatory obligations to store CO₂ has forced Chevron to spend tens of millions of dollars on carbon offsets, as well as pledge to invest A$40mn (US$26mn) in lower-carbon projects in Western Australia.

Carbon capture, utilisation and storage technology aims to prevent emissions from industrial and power plants from contributing to global warming by either storing the carbon underground or reusing it in building materials, agricultural products or fuels.

More than 500 projects are in various stages of development, according to the International Energy Agency. The US and other governments are providing tens of billions of dollars in tax breaks and subsidies to support the rollout of the technology.

But critics say disappointments at Gorgon — which is operated by Chevron and whose partners include Shell, ExxonMobil and several big Japanese utilities — and several other high-profile projects expose its imperfections.

“Gorgon points to the problematic nature of carbon capture and storage more generally, in that a lot of the companies don’t know what is going on underground,” said Bruce Robertson, an energy analyst and co-author of a critical report on the project.

Recommended

The unique nature of underground conditions at CCS sites mean each project typically requires a “bespoke engineering solution rather than a cookie-cutter model that can be easily replicated”, which increases costs, Robertson said. “Chevron and Shell are oil majors and if they can’t get it right, who can?”

Some critics allege the fossil fuel industry is promoting CCUS as a way to justify the continued development of oil and gas resources. But others argue that the technology has an important role. “Carbon capture lets us cut carbon pollution today in the near term and we need to do that as quickly as possible to solve this problem,” said Benjamin Longstreth, director of carbon capture at the Clean Air Task Force.

Bonner said Chevron was committed to CCS and has a company-wide target of capturing 25mn tonnes a year of CO₂ by 2030. It is funding pilot projects in the US to help it achieve technological breakthroughs, she said.

“We are coming to this from a position of strength because in our business we have a lot of subsurface work,” Bonner said.

Chevron is also seeking to offer CCUS as a service to customers and create a new business line for the company, she added.

This article has been amended after Chevron clarified a detail of its company-wide target for capturing CO₂ by 2030