Santos blames government, activists and regulators for gas woes

“The cold snap, however, was not the cause, but rather the catalyst that highlighted the following market shortcomings: low renewable power generation from solar and wind, coal outages and supply shortages in part caused by wet weather and also the export of coal to higher international price markets (and) significant underinvestment in new energy supply due to activism and regulatory uncertainty,” she said.

Most of the east coast gas production is exported through three plants in Gladstone, including Santos’ Gladstone LNG, which since 2015 has had to seek gas supply from the market to meet export commitments because its own gas fields have underperformed.

Santos has announced a new three-pronged strategy, with the common theme of using current oil and gas infrastructure as long as possible, to achieve what Norman called “decarbonisation, not defossilisation.”

Gallagher said Santos wants to maintain production levels through its main assets – the Darwin, Gladstone and PNG LNG plants, Cooper Basin onshore gas and WA offshore gas “through to the mid-40s and beyond.”

In parallel, Gallagher hopes to build a carbon capture and storage business both for Santos to achieve its target of net-zero emissions by 2040 and to sell the service to industry. Two offshore facilities nearing the end of production that would otherwise be decommissioned at great expense are targeted to be used for carbon storage: Bayu Undan north of darwin and the Reindeer platform off WA.

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Gallagher said that east coast industry could need to store 40 million tonnes of greenhouse gases a year if the federal government’s review of the safeguard mechanism that regulates the sector’s emissions plays out as it expects.

Starting late this decade Santos wants to build a “clean fuels” business, citing a lack of current demand for the delay. Gallagher said Santos estimated green hydrogen – produced with renewable energy and heavily promoted by Forrest – costs up to ten times the cost of gas.

“Then there is the trillions of dollars of investment required for infrastructure to switch to hydrogen,” he said.

Instead, Santos is focused on making “renewable methane” by the 2030s, combining green hydrogen with carbon dioxide captured from the air, and then export it using its existing facilities.

Santos shares closed down 5.3 per cent to $7.57 after the company announced it expected 2023 production to be eight to 12 per cent lower than 2022.

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