UK supermajor BP could be set to invest A$20 million (US$13.2 million) in a carbon capture and storage (CCS) project in South Australia.

Australian independent Santos confirmed Wednesday it had entered a non-binding agreement with BP which could see the latter invest in the Moomba CCS project.

The project will capture the roughly 1.7 million tonnes of carbon dioxide currently separated from gas at Santos’ Moomba plant and safely and permanently re-inject it into geological formations in the Cooper basin.

“Australia needs low-cost, large-scale abatement to maintain our position as a leading energy exporter and manufacturer of energy-intensive materials such as steel and cement, as well as to enable new industries such as hydrogen,” Santos chief executive Kevin Gallagher said.

“With the Cooper basin’s reinjection capacity assessed at up to 20 million tonnes of carbon dioxide per year for 50 years, it has the potential to be a large-scale carbon sink for power generators and other industries in eastern and southern Australia.”

Gallagher said the agreement with BP brought the proposed Moomba CCS project closer to fruition, adding Santos currently estimated the cost of abatement at less than A$30 per tonne, and the company hopes to drive that cost even lower with scale and experience.

“Today, CCS projects globally store around 40 million tonnes per year of carbon dioxide, far short of the more than two billion tonnes of carbon dioxide the International Energy Agency forecasts that CCS projects will need to store each year by 2040 if the world is to meet its climate aspirations,” he added.

“Just as private investment in renewable energy deployment was accelerated through public policy and funding over the last two decades, we now need to focus on accelerating CCS in similar ways to achieve the scale and experience that will not only drive costs down but will also deliver real scale when it comes to emissions reduction.”

Santos has already commenced front-end engineering and design work on the Moomba CCS project and its non-binding agreement with BP is subject to a final investment decision being taken, which is expected by the end of 2020 and could see injection start as early as 2023.

The deal with Santos has been made as part of BP’s Good Standing Agreement with the federal government following its withdrawal from exploration in the Great Australian Bight, off South Australia.

BP and Chevron, which also withdrew its Bight exploration plans, pledged to invest A$116.5 millionin oil and gas exploration in Australia under a settlement agreement with the federal government following their respective exits from the Bight.

Both companies have three years to deliver on their investments, with BP set to invest A$40.6 million by October 2022 and Chevron to invest A$75.9 million by September 2022, with at least half of the activity to be directed to projects in South Australia with a view of increasing Australian energy supplies.

This article first appeared in Recharge's sister publication Upstream