The implementation of carbon capture, utilization, and storage (CCUS) technology is the key to reducing emissions in the upstream oil and gas industry to be in line with global low-carbon initiatives. However, economic factors pose a challenge to the use of this technology.
Vice President of Subsurface Asia Pacific & India BP Dan Sparkes said the technology factor is no longer a challenge for the implementation of CCUS in the upstream oil and gas industry. This is because the upstream oil and gas industry has experience in injecting CO2 into the bowels of the earth. The main challenge in implementing this CCUS is its economy.
“I think the first thing that must be done for the project to operate is to seek profit from this project (CCUS). Enhanced oil recovery (EOR) based on CO2 is the easiest example," he said at The 2nd International Convention on Indonesian Upstream Oil and Gas 2021 in Bali, Monday (29/11).
Another example is the CCUS Project in the Tangguh Liquefied Natural Gas/LNG refinery complex which is managed by his party. In the refinery project, carbon capture facilities are available, so the expensive investment requirements of the CCUS project have actually been paid for.
"So this kind of project does not need as many incentives as CCUS projects in new oil and gas fields," said Sparkes.
Another thing that can be done to attract investors to work on this CCUS is to set a price for carbon emissions. Not only attracting investors, but the pricing of carbon emissions will also help CCUS projects that are on the verge of the economic threshold.
"So that it can fulfill the economy at a cheaper price," he added.
Regarding the implementation of CCUS, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that his party is ready to provide support in the form of incentives according to the needs of each CCUS project.
The reason is, cutting carbon emissions has become a policy of the Government of Indonesia, so it must be carried out. He admits that the economy is indeed the key to the CCUS project or not. However, his party will ensure that other costs other than the need for CCUS technology must be as efficient as possible.
“Capex (capital expenditure) apart from low-carbon initiatives, must be really efficient. So, if CCUS is added, the economy can still be maintained. But if it is maximal, it is impossible to operate without incentives, as a consequence, it must provide incentives, "explained Dwi.
Indonesia has great potential for carbon capture. This is because many oil and gas reservoirs have started to run out of reserves. This reservoir can be used to store carbon emissions captured using CCUS technology. His party is mapping out which oil and gas fields can be the location of this CCUS.
"This can be offered to countries near the location to be able to use the storage, as well as to other industries. So if the gas is empty, we can sell storage, "he explained.
Already Rolling
The Ubadari Field development project and the Vorwata Carbon Capture Utilization and Storage (CCUS) project carried out by BP Berau Limited are some of the CCUS projects already underway in Indonesia. According to Deputy Head of SKK Migas Fatar Yani Abdurrahman, the Plan of Development/POD for the project was approved some time ago. Now, his party has signed a memorandum of understanding with BP to ensure this project takes place.
"With the memorandum of understanding, it will accelerate the approval for BP to reach the FID (Final Investment Decision)," he said.
He explained that with the memorandum of understanding lasting for one year, his party hoped that an agreement could be reached with BP so that the CCUS project could be implemented.
"This CCUS is still new, so we really have to study what can be applied again, we are looking for the right way and technology," added Fatar.
Investor Daily, Page-10, Tuesday, Nov 30, 2021
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