Pilot Energy and Triangle Energy have reached an agreement on the key principles to restructure the existing joint venture ownership arrangements for the Cliff Head joint venture (CHJV) and the proposed Cliff Head carbon capture and storage (CCS) project.
At the end of March Pilot announced it had been undertaking feasibility studies into the potential for carbon capture and storage and blue hydrogen production focussed on the Cliff Head oil field, which has confirmed a significant CCS resource in WA-31-L.
The binding Cliff Head re-alignment term sheet paves the way for Pilot and Triangle to progress an application to the National Offshore Petroleum Titles Administrator (NOPTA) to have the Cliff Head Oil Field reservoir declared a Greenhouse Gas Storage formation (milestone 1) and to pursue the Cliff Head CCS project once economic oil production has finished.
Following a declaration, the CHJV anticipates making an application to NOPTA for the grant of a Greenhouse Gas Injection Licence for the injection and permanent sequestration of a minimum of 500,000 tonnes of CO2 per annum into the Cliff Head Oil Field reservoir. Receipt of this Injection Licence (milestone 2) will enable the CHJV to commence the implementation of the Cliff Head CCS project with the project anticipated to be operational by 2025.
The key terms of the binding Cliff Head Re-Alignment Term Sheet – entered into between Pilot and Triangle and which are conditional upon initially milestone 1 are:
- Pilot and Triangle (via their wholly owned subsidiaries) will restructure their interests in the WA-31-L Cliff Head project resulting in Pilot holding a direct 57.5 per cent participating interest share in CHJV (oil project) and the CH CCS Project and Triangle holding a direct 42.5 per cent interest in both projects.
- Pilot will become operator of both the CHJV and the CH CCS JV, although Triangle will continue technical operatorship of the CHJV through its oil production life.
- The parties will co-operate and participate in an application to NOPTA for the declaration of a greenhouse gas storage formation under the Offshore Petroleum and Greenhouse Gas Storage Act of 2006 (OPGGSA).
Milestone 2 will see the parties being granted a GHG Injection Licence. Once approved (anticipated by mid 2023) the grant of the GHG Injection Licence will provide a clear pathway for the development of the CH CCS Project including an endorsement of the project by the offshore regulator, NOPTA and the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).
Pilot executive chair Brad Lingo said re-alignment of the CHJV interest between Pilot and Triangle is a significant step in the development pathway for the first offshore CCS project in the Mid-West WA and for the future re-tasking of the Cliff Head infrastructure.
“Declaration of the CCS resource is an important near-term milestone for the progression of the CH CCS project and will provide sufficient confidence to unlock further investment in the development project. Pilot is extremely excited to proceed with its clean energy development pathway and this arrangement with Triangle is a significant step in that direction,” he said.
Triangle managing director Conrad Todd said the company have concluded this term sheet for a CCS project with Pilot.
“It provides an exciting and profitable use for the Cliff Head facilities once the oil field reaches its end of economic life. Our co-operative joint venture will both reduce Triangle’s abandonment liability and defer it for at least 10 years after oil production. We are especially pleased that the CHJV will at the same time be making a significant contribution to the reduction to the Carbon Dioxide emissions in Western Australia.”