Resources giants to stump up $1b for carbon plant
THE higher carbon intensity of new gas fields being tapped by BHP Billiton and ExxonMobil is costing the pair almost $1 billion long before they pay their carbon taxes.
The two resources giants will spend $992 million building a "conditioning plant" beside their Longford gas plant in Victoria to remove excess carbon dioxide from three new gas fields in Bass Strait that will soon be brought into production.
The carbon-removal plant is part of a $4.4 billion plan to develop the new fields, which are known as Kipper, Tuna and Turrum.
The two companies run a 50-50 joint venture at Longford, meaning that both will stump up about $500 million for the carbon plant.
Once the gas passes through the new carbon plant, it can be fed into the existing processing plant at Longford which was built for gas with lower carbon composition.
The carbon dioxide removed at the first stage will be released into the atmosphere, but the companies are believed to be building it with the capacity to adapt to carbon capture and storage should such technology ever prove viable.
The spending on extraction of impurities will not end there, with the joint venture soon to decide on how to treat high levels of mercury in the new gas fields.
Discovery of those high mercury levels was responsible for cost and schedule overruns on the Bass Strait project almost two years ago.
The spending is a rare example of Australia's gas boom directly having an impact on the nation's south-eastern corner, and Victorian Deputy Premier Peter Ryan hailed the investment in local jobs.
"The new $1 billion facility at Longford will create around 250 direct construction jobs and countless more indirect jobs, providing significant flow-on benefits to our local communities," he said.
Construction of the new carbon plant will begin around July 2013 and BHP's petroleum chief Mike Yeager said it was a "necessary extension" that would ensure the Bass Strait infrastructure remained operational "for years to come".
Despite being a major producer of coal, oil and gas, BHP Billiton has a company policy of accepting the mainstream science that suggests higher rates of greenhouse gases in the atmosphere are changing the world's climate. BHP's Longford operations are one of seven divisions within the company that are liable to pay the carbon tax, which is understood to shave less than 1 per cent off the company's earnings.
BHP shares rose 24¢ to close at $36 on Thursday.