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CO2 storage potential major part of PEP-11 according to Advent Energy chair David Breeze | Newcastle Herald - Article by Ian Kirkwood

THE high-profile protests against the gas exploration project known by its permit number as “PEP-11” represent one half of a protracted battle that pitches environmentalists – and growing numbers of the general public – on one side, against resource companies and their investors and customers on the other. While the protests – and the doubts raised by Prime Minister Scott Morrison, Deputy Premier John Barilaro and local MPs – gain most of the public attention, the PEP-11 title-holders are working quietly on the project from their offices in Perth. PEP-11 is held by two companies: Advent Energy Ltd with 85 per cent, and Bounty Oil and Gas NL with 15 per cent. Advent, in turn, is an unlisted oil and gas exploration company whose major shareholders are BPH Energy, Grandbridge and MEC Resources. West Australian resources sector veteran David Breeze is chairman of both Advent Energy and BPH Energy.

In light of Saturday’s paddle-out protest at Nobbys – and recent corporate developments including the raising of $9 million to fund more work on PEP-11 exploration, the Newcastle Herald spoke with Mr Breeze yesterday to get his view of the project, and the process by which one person – federal Resources Minister Keith Pitt – has the final say in whether the PEP-11 permit, which expired in February, will be renewed. Mr Breeze said the project had two elements. The first was for gas as a source of energy. The second was for the underground reservoirs – whether or not they contain commercial amounts of gas – to be used for the storage part of the “carbon capture and storage” (CCS) process. CCS, which Mr Breeze said was now used commercially in Norway, involved capturing carbon dioxide at the source of its production – typically coal-fired (or gas-fired) power stations, steel mills and cement plants – and then compressing and transporting that CO2, which is then injected underground and sealed there. CCS is widely criticised in the environmental movement but Mr Breeze said it could play a major role in the push for “net zero emissions. He said the “offshore Sydney Basin area” covered by PEP-11 had been identified both by Geoscience Australia and the CO2 Co-operative Research Centre (CO2CRC) in Victoria as a potential storage area. In the language of oil and gas mining, “enhanced recovery” means pumping CO2 into the targeted reservoir to help push the wanted product out. “Enhanced recovery using CO2 already works on a global scale and so it stands to reason if you have offshore gas you can take the methane out and substitute it with CO2,” Mr Breeze said. He said one of the most important attractions for PEP-11 as a storage facility was its proximity of its two major prospects – known as Baleen and Fish – to the Hunter Valley and the Central Coast, where the bulk of the state’s coal and gas fired electricity was generated. He said NSW generated about 131 million tonnes of CO2 a year: 68 million tonnes of that came from “stationary” sources, and about half of that stationary output came from the state’s coal-fired power stations. He said the viability of CCS swung on its cost, and the cost of energy. Advent first explored CCS with PEP-11 back in 2010 in conjunction with the CO2CRC but “nothing went ahead because we couldn’t get funding”. CCS had a “stretch target” of $20 a tonne to “capture, transport and sequester”, which was “ambitious” and well below the present cost. In a similar fashion, he said, Santos and Ampolex identified Baleen as a “multi TFC (trillion cubic feet) prospect 30 years ago”. “But back then no-one was interested in gas as an energy source because coal was cheap and CO2 was not a problem,” Mr Breeze said. “Gas then was $2 a gigajoule but was uneconomic to develop. Now, industry is paying about $9 a gigajoule, but at that price it is uneconomic from the other way, in that it’s too expensive.” Mr Breeze said that if Baleen or Fish went ahead, once a well was sunk, there would likely be “nothing to see” and “no environmental impact” or interruption to fishing because the gas would be brought onshore near Lake Munmorah through a “sub-sea floor” pipe. He said both prospects were “well over the horizon”, about 25 kilometres offshore. Testing indicated gas about 2.1 kilometres under the sea floor, in ocean depths of about 120 metres. Although investors know the environmental objections being placed in front of PEP-11, Mr Breeze said BPH had “no problems” raising $9 million earlier this year, with $5.75 million of that to be used exploring Baleen. To do this, the joint venture needs Resources Minister Keith Pitt to approve an extension of the PEP-11 permit. Such permits are registered through a federal agency, the National Offshore Petroleum Titles Administrator (NOPTA). As has been widely reported, the PEP-11 permit expired in February. Mr Breeze said two applications had been lodged with NOPTA – one in December 2019 and a second, follow-up application in February this year after the government recognised the impact that COVID-19 was having on the offshore exploration sector and declared “force majeure” (unforeseeable circumstances preventing a contract from being fulfilled). Mr Breeze said the permit-holders were seeking an extension of time to enable drilling, and permission to move straight to drilling without seismic, or 3D imaging, testing. “NOPTA assesses a proposal and asks us questions and when it’s satisfied with what it has it makes its recommendation to the ‘Joint Authority’, which is John Barilaro as NSW Resources Minister and Keith Pitt as federal Resources Minister,” Mr Breeze said. Mr Pitt’s office has declined to make NOPTA’s recommendation public, and Mr Barilaro has said publicly he is opposed to the project, but Mr Breeze said the final approval rested with Mr Pitt alone. Mr Pitt told the Herald on Sunday he would make that decision “in due course”.