SK E&S to start business of carbon storage in depleted gas fields

South Korea’s SK E&S Co. is set to enter the business of carbon storage in depleted gas fields.

The natural gas business unit of SK Group said on Thursday it will begin the front-end engineering design work to transform production facilities at the Bayu-Undan gas field, located south of East Timor, into a carbon capture and storage (CCS) plant.

The Bayu-Undan field, in which SK E&S has a 25% stake, is scheduled to stop production early next year. The field is also owned by other energy companies such as Australia’s Santos Ltd., Japan’s Inpex Corp. and Italy’s Eni.

Last year, SK E&S unveiled a plan to use CCS technology to create low-carbon liquefied natural gas at the Barossa gas field, located off Australia’s Northern Territory, that the company joined in the development for in 2012. SK E&S plans to import about 1 million tons a year on average for 20 years from 2025.

TO STORE 10 MILLION TONS OF CARBON A YEAR

The South Korean company and its partners aim to permanently store carbon dioxide captured from natural gas of the Barossa field in the sandstone layer the 3 kilometers underground the Bayu-Undan field. The CCS plant will be able to store 10 million tons of carbon a year and its storage capacity is expected to increase.

“We plan to offset all emissions by purchasing carbon emission rights for carbon generated during LNG liquefaction,” said an SK E&S source. “Ultimately, we plan to bring carbon-neutral LNG into Korea.”

SK E&S and its partners are scheduled to complete the detailed design of the CCS project and specify investment costs.

SK E&S also plans to start building the facility in early next year after obtaining permissions from Australia and East Timor in 2022. The company is set to recycle the Bayu-Undan field’s existing production equipment and submarine pipelines into carbon transportation and injection facilities to maximize the project’s economic feasibility.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jongwoo Cheon edited this article.