Out in the middle of the ocean, off the far northern coast of Australia, floats one of the country's biggest regulatory failures in a generation. The rusting hulk of the Northern Endeavour – a 274m-long, floating oil production, storage and offtake facility, named for the ship Captain James Cook used to sail the coast of Australia – sits approximately 550km northwest of Darwin in the Timor Sea, out in Australian waters. (Pictured above; photo courtesy Australian Government, Department of Industry, Science and Resources).
The vessel first entered production in 1999 and over the next two decades, under various owners, pulled roughly 200 million barrels from nine wells 380m beneath the sea. In 2016, as the field was almost depleted, Woodside Energy – Australia’s biggest domestic oil and gas producer, and the owner at the time – flogged it to a company no one had heard of.
Northern Oil and Gas Australia (NOGA) had been founded the year before by Sydney-based entrepreneur Angus Karoll, who had made his money in coal seam gas but had no experience in offshore oil production. Having picked up the facility for a song, his plan was to squeeze the last dregs out of the aging field, a deal that would also allow Woodside to side-step substantial decommissioning costs—an approach that's become a hallmark of fossil fuel producers the world over. But as the Northern Endeavour began falling apart, running costs outstripped any money it was making. By 2020, NOGA was bankrupt.
Who might be responsible for dismantling and cleaning up the facility remained an open question as the Australian government took it over. The question was resolved in May 2021 when the government imposed a levy on Australia’s oil and gas producers to cover the cost. Work is now underway to unhook the vessel from its wells and tow it to shore. There’s a one-to-ten percent chance it may break apart when the attempt is made.
It is possible to read the story of the Northern Endeavour as a morality tale about greed and lax regulation. But the episode also underscores a very real example of what could go wrong with several new large-scale carbon, capture and storage (CCS) projects across the country. As ageing oil and gas fields are nearing the end of their productive lives, the companies that once exploited these formations are increasingly proposing they now be used to store carbon dioxide as a climate solution.
With 1000 known wells in coastal waters around the country, fossil fuel producers face an estimated AUD$55bn decommissioning bill in Australia. Tim Beshara, manager of policy and strategy at The Wilderness Society Australia, suggests that this looming cost is what's really at the heart of the country’s push to embrace CCS. Re-using old platforms and infrastructure at each site means the industry can wipe a liability from their books, claim a climate win without verifying emissions reductions, and even potentially shift clean up costs to the government. The Northern Endeavour, and other sites like it—including right next door in New Zealand—provide a preview of how messy the process could be, particularly in countries that lack the regulatory regimes necessary to hold global companies to account.
“It’s happening all over the world,” Beshara says. “These companies sell over their late-life assets to late-life asset specialists who roll the dice to see if they can get a few more years out of a field, or in the new version try to turn it into a profit-producing enterprise using CCS for speculative applications.
“If it doesn’t turn out, the liability just rusts into the ocean.”
Australia has long looked upon CCS as a get-out-of-jail free card for its climate obligations. As one of the world’s top coal and liquid natural gas exporters, fossil fuel producers have enjoyed a protected status in Australia for decades. Almost from the very beginning, Australia’s efforts to address climate change have been considered through the prism of its dirty exports.
In the mid-to-late 2000s, the Australian government and companies operating in the country began looking at how to deploy the technology to capture emissions during power generation, as a way to help protect the coal industry. The basic idea was to bolt a CCS operation onto ageing coal-fired power plants to skim off the CO2. The CO2 could then be injected beneath the earth to prolong the working life of the plant in a carbon-constrained world.
The false promise of “clean-coal” was so strong, laws were passed to act as a scaffold for what was anticipated to be an emerging industry focussed on carbon sequestration. A particular concern among potential operators was the risk that, since this carbon was meant to be stored forever, they might be on the hook for maintaining a closed CCS site, long after commercial operations had ceased and they had moved on. To resolve this, the Australian government indemnified operators. Fifteen years after an operation closed, the government would assume full responsibility for the site, so long as proper process had been followed and there was no obvious issue with the work done. Similar provisions were later passed in states such as Western Australia to enable projects like Chevron’s Gorgon on Barrow Island, the world’s largest long-term industrial CCS project. The planning for Gorgon took shape in 2016 as a partnership that included Chevron, Shell and ExxonMobil, with the first CO2 injected in 2019. The CCS component of the operation has consistently failed to perform to expectations, with the amount of CO2 injected falling each year between 2020 and 2023. Factoring in the emissions created by gas extraction, the operation is one of Australia’s largest industrial emitters.
But as fossil fuel producers used the technology to market their climate credentials, the anticipated wave of investment in CCS never arrived. As of March 2024, there are now just 18 projects in various stages of development around the country being tracked by the CO2CRC, a predominately industry-funded research organisation that focuses on CCS. The non-for-profit business, which began as part of an Australian government-funded research program to promote collaboration between industry and researchers, also operates Australia’s first CCS project, the Otway International Test Centre, that includes saline aquifer storage and a former gas field along the Victoria coast.
CO2CRC claims that the Otway facility has successfully injected 65,000 tonnes of CO2, in its first stage of operation and 15,000 tonnes during each of its second and third stages. The carbon dioxide was not sourced from an industrial operation, but from a nearby well-head providing naturally-occurring CO2.
This work, says the organization’s CEO, Dr. Matthias Raab, is proof of concept. It has established that it is possible to safely inject and store CO2 beneath the earth’s surface. With another 10,000 tonnes injection planned for this year, Raab says that the current goal is to help develop high-fidelity monitoring technologies to track CO2 as it moves through a geological formation – a field of research that is currently in high demand. As companies and governments embrace CCS, there is growing pressure to prove that carbon stored underground actually stays underground, but there is currently no way to do this with certainty.
“We do pilot research for many different technologies.” Raab says “Unless the engineering is being done, the upscaling is being done and the operational challenges are being addressed and learned, new technologies remain conceptual.”
Raab says that though some technologies are still being developed, “CCS [itself] is a proven technology and is essential to decarbonisation” – particularly for Australian gas producers.
“One of the fundamental assumptions is whether we are going to use oil and gas going forward? The answer in every single forecast is ‘yes’,” he says. “As long as there are no alternative fuels, we better pull up our sleeves and decarbonise our primary energy sources.”
Whether CCS can actually decarbonise fossil fuels is a matter of some debate, even among proponents. Dr. David Ho, a climate research scientist with University of Hawai'i at Mānoa, is an advocate for carbon removal technology that removes CO2 from the air rather than capturing it at the point of production. This is in contrast to the use-case often proposed by industry to capture reservoir CO2 during oil and gas production.
“CCS can make sense for harder-to-abate situations, like fertilizer and concrete, but it doesn't make sense to use CCS to prolong our use of fossil fuels, especially to produce electricity," Dr. Ho says."I would love to see us take CO2 out of the atmosphere, but it’s important not to put it there in the first place.”
Raab says that “there is no scenario by any agency, IPCC, [International Energy Agency], Net Zero Australia” that imagines a world without gas or CCS—and the technology will be “vital,” he says, to addressing climate change.
“There’s so much more confidence and sophistication in the technology than what is currently publicly discussed,” Raab says.
Raab’s views echo those of other Australian industry figures at a time when oil and gas producers have been under pressure from scientists and civil society groups to end fossil fuel production. Kevin Gallagher, the managing director of domestic Australian oil and gas producer Santos, has repeatedly called for “decarbonisation, not defossilisation” and suggested oil and gas companies are the only ones with the “capability, resources, infrastructure, customers and balance sheets” to deliver a transition using CCS. In a speech in March this year, Samantha McCulloch, CEO of Australia’s longest-running oil and gas industry association, Australian Energy Producers (AEP), falsely claimed that “in the [International Energy Agency’s] vision for net zero, gas provides more energy between today and 2050 than wind or solar."
In truth, the International Energy Agency’s landmark Net Zero Roadmap – attacked by Gallagher as relying on “assumptions” – forecasts that solar and wind will provide seven times more energy than gas globally by 2050. When it comes to CCS, the IEA found that the technology became significant in scenarios where the world delayed phasing out oil, gas and coal — or took no action at all.
Within Australia, Tennant Reid, Director of Climate Change and Energy at the Australian Industry Group, says that gas will only play a small role in the country’s energy grid going forward. The most recent plans by the Australian Energy Market Operator have the country sourcing the overwhelming majority of its electricity – “between 95% and 99%,” Reid says – from renewables by 2040, with the remainder provided by gas peaking plants that only operate as back-ups.
“This is a really ambiguous zone rhetorically – a thing can be small and significant,” Reid says. “The insurance role for gas gets confused with a very different role for gas. A lot of people don’t make a clear distinction in their heads between that back-up role, and the role that gas has played in the power system in places like the US where there has been this huge shift in bulk energy from coal to gas.”
With gas playing a small role within Australia into the future, and the vast majority destined for export to South Korea and Japan, Kevin Morrison, an energy finance analyst with the Institute for Energy Economics and Financial Analysis, says it is telling that Australia is “going all in” on CCS.
“It’s really a fig leaf so industry can continue producing more oil and gas; it really doesn’t do anything to reduce emissions,” Morrison says. “[CCS] is only addressing, really, Scope 1 as it’s collecting the CO2 contained in the gas and the oil field. That’s less than 10 percent of the emissions for the oil and gas project, because most occur when the gas is combusted.”
According to an IEEFA analysis of data used by the Intergovernmental Panel on Climate Change in its Sixth Assessment Report, released in 2023, even if CCS were deployed at maximum scale and efficacy, it could only account for about 2.4 percent of global decarbonisation by 2030.
However, Morrison says CCS is essential to plans by countries like Japan to create a future CO2 export industry. A report by the Institute for Energy Economics and Financial Analytics published in May found that as Japan’s own gas demand has been falling, the country has been on-selling Australian gas across South East Asia in pursuit of geo-political goals – even as it eyes Australia as a dumping ground for waste CO2.
“Not only have Japanese companies made agreements with Santos and Bayu Undan,” Morrison says. “They’ve also made agreements with companies in Indonesia and Malaysia. Japan sees all of the Asia-Pacific as some big CO2 trading hub. Everything is totally opportunistic with CCS.”
Billions of dollars are currently being spent across Australia to lock in new gas production. There’s Woodside’s AUD$16.5bn Scarborough project and its troubled AUD$30bn Browse development, which recently was found by the Western Australian Environmental Protection Authority to pose an “unacceptable” risk to the pristine Scott Reef, a coral reef ecosystem home to 1500 species. Santos is currently building pipelines 300km to connect the AUD$5.8bn Barossa gas project – described by critics and analysts as a carbon-dioxide emissions factory, with an LNG by-product – to its processing facility near Darwin. Under Australia’s Safeguard Mechanism – a baroque and highly complex set of laws and regulations designed to drive decarbonization by ratcheting up pressure over time – these and other projects in the pipeline will need to fully offset the carbon dioxide produced from their gas fields.
CCS offers a solution to the problem for industry, particularly at a time when they are becoming liable for decommissioning. Among the most significant of these proposals is a plan by ExxonMobil to repurpose offshore gas platforms and pipelines built in the 70s off the southeast Australian coastline to store CO2 beneath the ocean floor in the Bass Strait. Another involves two separate proposals by Santos to repurpose depleted fields at Moomba in the Australian outback for an onshore CCS project, and a second using the depleted Bayu Undan gas field off the coast of northern Australia – not far from where the Northern Endeavour lies. A third, smaller venture has been proposed by operator Pilot Energy, off the coast of Perth, Western Australia; this project would reuse a depleted oil field for carbon sequestration, with a long-term goal to set up a direct air capture operation in the future.
Louise Morris, oil and gas campaign manager with the Australian Marine Conservation Society, says that the rush to set up a new industry to facilitate “carbon pollution dumping” is being done without a real appreciation of the risks involved – the first being inherent unknowns with geology, even in heavily-explored oil and gas fields.
"Think of it like doing an autopsy on a dead cat with a straw,” Morris says. The Norwegian CCS operation Sleipner “has long been held up by the industry as a success story and proof carbon dumping below the ocean floor is a safe and predictable adventure," Morris says. "However, when they injected the CO2 into the subsea formation they found it moved and migrated in unexpected ways, and into formations they had not predicted were connected."
Another associated risk, Morris says, is the “pin-cushion effect”. Even assuming every drill site is known, accurately documented, and correctly plugged – every shaft needs additional plugs above each layer where the gas may sit – attempting to store carbon dioxide in formations carries additional risks. A failure to properly manage these risks, or to anticipate them, can render the operation unworkable either because the CO2 cannot be properly stored, or it cannot be injected fast enough to make it commercially viable.
But that is not all, Morris says. Pipelines built to carry oil or gas use a particular grade of steel that may not be suitable to carry CO2, or may not have been properly maintained. Pumping liquefied CO2 risks corroding the metal to the point where it ruptures – a significant risk. In April 2024, a CO2 pipeline used for Enhanced Oil Recovery in Louisiana burst, blanketing a small community in a thick, suffocating fog. Where a rupture occurs in a marine environment, Morris says a suffocating blanket of CO2 will asphyxiate nearby ocean life and acidify the water. This risk is even greater where the geological formation itself is compromised or a “marine fissure” may occur, resulting in an uncontrollable release of CO2 that “turns the ocean to soda water”.
“Really, it’s about avoiding decommissioning – we just use CCS instead,” Morris says. “It is another quarry-nation approach to dealing with commercial interests. We dig and mine our way out of problems for short term financial returns.”
Concerns that CCS is a way for companies to avoid or delay costly clean up bills are not without basis. In a recent report, Santos posted a $US135m loss (AUD$198m) and disclosed that it faced substantial costs from cleaning up leaking wells within its Western Australian division that threaten to drag down the company’s financial performance. One such liability is the Legendre gas field off the Pilbara coast, where 22 gas wells are leaking methane – a greenhouse gas 80 times more potent than CO2. The company has previously suggested it is impossible to fix these leaks. Outgoing Chief financial officer Anthea McKinnel said Santos was “working with regulators” to spread decommissioning costs out over time.
Santos is not the only company with ageing infrastructure and a big clean-up bill. Recycling old infrastructure for CCS potentially offers a way out of an expensive dilemma – but if something were to go wrong, the question of who would be left to pick up the bill remains. Professor Tina Soliman Hunter, a legal academic and director of Macquarie University’s Centre for Energy and Natural Resources Innovation and Transformation, believes the Australian government has learned from experience with the Northern Endeavour. Legislation covering CCS in Australia now contains provisions that allow for trailing liability. These provisions, Hunter says, mean that “whoever has got [an asset] now, if they can’t pay for it, the one behind them will.”
“What we’ve got is a set of legislation going forward for any activity that’s going to happen,” Hunter says. “In fact, we’ve got these provisions for CCS that we don’t have for petroleum.”
However, Hunter says these laws “still need to be tested” as there have been no CCS wells handed back to the Australian government to date.
A Department of Industry, Science and Resources spokesperson did not respond to specific questions about how Australian regulations might handle liability for closed CCS projects. “The Australian Government expects, and the legislative regime requires, the oil and gas industry to pay for safe and responsible decommissioning,” the spokesperson said in a statement. “The government has made it clear that taxpayers will not be left to pick up the costs.”
What is clear is that CCS now underpins Australia’s climate policy – a faith in the technology that climate scientist and Australian lead author on the IPCC6 Assessment Report Joëlle Gergis describes as “wilful ignorance” about the reality. With four-in-five CCS projects having failed to deliver over the last 30 years and currently-operational facilities having helped only offset 0.1 percent of carbon emissions each year, she says the technology is being treated as a “silver bullet”.
“Governments are expecting CCS to materialise and reduce our emissions, and that to me is a reckless gamble with our future,” Gergis says. “We’re effectively refusing to acknowledge the fact that we do need to stop the burning of fossil fuels. The science tells us that around 60 percent of oil and gas reserves, and 90 percent of coal must remain unextracted if warming is to be limited to 1.5C. If we’re going to continue onto extraction, we’re going to pour more fuel on the fire.”
