SK E&S, a New Era in Resource Development... Opening a CO₂-Free Eco-Friendly LNG Era

[Asia Economy Reporter Hwang Yoon-joo] SK E&S's overseas investment in eco-friendly gas fields over the past decade has finally borne fruit.

On the 30th, SK E&S announced that it has declared the Final Investment Decision (FID) for the Barossa-Caldita offshore gas field in Australia, which it has been developing since 2012, and will officially begin producing liquefied natural gas (LNG) with reserves exceeding 70 million tons.

Additionally, the company expressed its ambition to actively lead greenhouse gas reduction as a global major eco-friendly energy company by producing 'CO₂ Free/low-carbon LNG' using CCS (Carbon Capture & Storage) technology that collects and removes carbon dioxide generated during the natural gas production process.

The Barossa-Caldita gas field, being developed by SK E&S in partnership with Australian energy company Santos, is an offshore gas field located in northern Australia. Since joining the project in 2012, all necessary preparations for development, including reserve evaluation, permits, and design work, have been completed.

The area commencing development this time is the Barossa gas field within the Barossa-Caldita gas field, where the confirmed natural gas reserves alone exceed 70 million tons, nearly twice South Korea's annual consumption of about 40 million tons.

Compared to the reserves expected at the initial project participation, this is more than double, and considering the natural gas in the northern part of the Barossa gas field and the Caldita gas field, which have not yet been fully evaluated, production volume is expected to increase further.

Holding a 37.5% stake in the gas field, SK E&S plans to invest $1.4 billion of its share out of a total $3.7 billion investment over the next five years and import 1.3 million tons of LNG annually into South Korea for 20 years starting in 2025.

SK E&S, which has continuously expanded the LNG value chain including securing and developing natural gas resources, liquefaction, distribution, and discovering demand sources, made a bold decision to invest in the upstream (resource development) sector in 2012.

In overseas oil or gas field development projects, typically only about one out of ten succeeds, but SK E&S not only succeeded in its first gas field development project but is also evaluated to have achieved results exceeding expectations in terms of reserve size and economic feasibility.

In particular, SK E&S has significantly reduced new plant construction costs by securing all rights to use gas refining and liquefaction plants necessary for LNG production in advance through equity investment in the Darwin liquefaction plant already operating in Australia last year. The company added that this enables the Australian LNG developed by SK E&S to secure global top-level price competitiveness.

The company explained that another significance of this Australian natural gas field development lies in realizing ESG management through eco-friendly resource development.

Natural gas is the lowest-carbon eco-friendly energy source among fossil fuels but has the drawback of generating some carbon dioxide during production and combustion. Accordingly, SK E&S plans to realize the ‘CO₂ Free LNG’ business by capturing carbon dioxide generated during natural gas production, storing it in nearby offshore depleted gas fields, and further removing carbon dioxide emitted from LNG power plants through CCS technology advancement.

To this end, SK E&S signed an MOU last November with its partner Santos to explore cooperation opportunities in CCS and carbon reduction projects, and in March this year, they also signed a joint research agreement and have already begun feasibility studies for the CCS project.

In particular, SK E&S plans to continuously develop CCS technology and apply it to hydrogen production processes in the future. Starting in 2025, SK E&S intends to import LNG produced from the Australian gas field to South Korea and produce clean hydrogen with carbon dioxide removed through a hydrogen production plant to be constructed near Boryeong, Chungnam.

Chu Hyung-wook, President of SK E&S, stated, "By enhancing eco-friendliness throughout the entire process from overseas gas field development to domestic hydrogen production, we will not only practice ESG management but also make a tangible contribution to global greenhouse gas reduction."

This content was produced with the assistance of AI translation services.