Whole Of Life Greenhouse Gas Emissions Assessment Of A .

CSIRO ENERGYwww.csiro.auWhole of Life Greenhouse Gas EmissionsAssessment of a Coal Seam Gas toLiquefied Natural Gas Project in theSurat Basin, Queensland, AustraliaFinal Report for GISERA Project G2Heinz Schandl, Tim Baynes, Nawshad Haque, Damian Barrett and Arne GeschkeJuly 2019

ISBN (print): 978-1-4863-1294-8ISBN (online): 978-1-4863-1295-5CitationHeinz Schandl, Tim Baynes, Nawshad Haque, Damian Barrett and Arne Geschke (2019). FinalReport for Final Report for GISERA Project G2 - Whole of Life Greenhouse Gas EmissionsAssessment of a Coal Seam Gas to Liquefied Natural Gas Project in the Surat Basin, Queensland,Australia. CSIRO, Australia.Copyright Commonwealth Scientific and Industrial Research Organisation 2019. To the extent permittedby law, all rights are reserved and no part of this publication covered by copyright may bereproduced or copied in any form or by any means except with the written permission of CSIRO.Important disclaimerCSIRO advises that the information contained in this publication comprises general statementsbased on scientific research. The reader is advised and needs to be aware that such informationmay be incomplete or unable to be used in any specific situation. No reliance or actions musttherefore be made on that information without seeking prior expert professional, scientific andtechnical advice. To the extent permitted by law, CSIRO (including its employees and consultants)excludes all liability to any person for any consequences, including but not limited to all losses,damages, costs, expenses and any other compensation, arising directly or indirectly from using thispublication (in part or in whole) and any information or material contained in it.CSIRO is committed to providing web accessible content wherever possible. If you are havingdifficulties with accessing this document please contact csiroenquiries@csiro.au.

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ContentsAcknowledgments.viExecutive summary .vii1Introduction . 12Methods . 334ii2.1MRIO methods. 32.2MRIO Data Sources . 42.3CSG Production and Sales. 52.4CSG Business Operations Expenses . 52.5LNG Production and Sales . 72.6LNG Business Operations Expenses. 72.7Summary of Company Operations Expenses . 92.8LCA methods. 112.9CSG Infrastructure Construction and Transport. 122.10CSG Energy Use in Operations. 122.11CSG Electricity Production . 122.12CSG Life-Cycle Stages of CSG-LNG Production . 132.13Coal . 142.14GHG Emissions Impact Assessment. 14Results . 163.1Scope 1 Direct GHG Emissions (MRIO) . 163.2Scope 2 GHG Emissions from Grid Electricity (MRIO) . 173.3Scope 3 Indirect Greenhouse Gas Emissions (MRIO) . 183.4Comparison with Australian Black Thermal Coal (MRIO) . 213.5GHG Emissions on a Unit Mass Production Basis (LCA) . 213.6GHG Emissions on an Electricity Production Basis (LCA). 233.7GHG Emissions on a Thermal Heat Production Basis (LCA) . 24Discussion . 254.1GHG Emissions . 254.2Upstream GHG Emissions . 26

4.3Regional industry wide GHG Emissions . 274.4Comparison with coal fired electricity generation . 27References. 29 iii

FiguresFigure 1: Scope 1, 2 and 3 GHG Emissions associated with the present whole of life GHGemissions for a CSG to LNG gas project in the Surat Basin, Queensland Australia. Arrowsindicate physical and /or value flows to production that have associated GHG emissionsillustrating the feedbacks inherent in the complex economy surrounding and supporting thecompany’s activities. . 3Figure 2: proportion of non-labour CSG operational expenses in the ISAPC productclassification. Expenses on grid electricity were cross-checked with reported consumption of1,267GWhr (4.56 PJ) in 2015/16. . 7Figure 3: proportion of non-labour LNG operational expenses in the ISAPC productclassification. . 9Figure 4: proportion of non-labour operational expenses for every PJ of sales volume output(i.e. both CSG and LNG). The top 25 expense categories (by ISAPC product classes) are shown.11Figure 5. Comparison among studies of GHG emissions intensity of unit processes (units kgCO2/GJ) based on Tagliaferri et al. (2017). . 24TablesTable 1: Data harmonisation of production and expense data from CSG and LNG operations fordifferent financial years to obtain GHG intensities ( /PJ) in 2015/2016. Changes in prices andConsumer Price Index (CPI) are used to adjust LNG expense data for 2016/17 so that GHGemissions under future output scenario can be calculated. . 5Table 2: Operational expense profile of the ‘upstream” CSG extraction, gathering and pipelinedistribution for 2015/16 (excluding all labour expenses and including dehydration and watertreatment operations). Table shows the 18 most significant items. 6Table 3: Operational expense profile of the ‘downstream’ LNG operations for 2016/17(excluding all labour expenses), showing 18 most significant items. . 8Table 4: Relative proportion of operational expense intensities for a future output scenario ofproduction (excluding all labour expenses). CSG operations expenses were divided by only CSGsales volumes (PJ), and LNG operations expenses were divided by only LNG sales flows (PJ),before combining to obtain the intensities shown. 10Table 5: Stages of CSG-LNG production and data sources for the LCA analysis. . 13Table 6: Direct Scope 1 GHG emissions (kt CO2-e/year) and emissions intensities (kt CO2-e/PJ),and totals from the CSG and LNG operations at 2015/16 and a future output scenario forproduction. GHG emissions and intensities refer to upstream activities, pipeline transport andliquefaction (i.e. do not include shipping, regasification or combustion). . 16iv

Table 7: Scope 2 GHG emissions and emissions intensity for CSG - LNG output at 2015/16production levels and future output scenario. Note that emissions from grid electricity inQueensland uses the Scope 2 emissions factor of 0.79tons CO2-e/MWh (Department ofEnvironment and Energy 2017b) . 18Table 8: Direct and total impacts of production activities for CSG – LNG, as GHG emissionsintensity (kt CO2-e /PJ) and total GHG emissions (kt CO2-e /year) for the full production scenarioof production (not including shipping, regasification and final combustion). . 19Table 9: Proportional contributions and totals of annual Scope 1, 2 and 3 emissions from CSG –LNG operations (Scope 3 emissions are broken out into component emissions from row 3onwards). Last (shaded) column shows proportional contribution to total Scope 3 emissions (i.e.excluding Scope 1 and 2). . 20Table 10: Direct and total impacts of production activities by the ‘Black Coal’ sector in Australia,as an intensity (kt CO2-e /PJ) and total (kt CO2-e /year) for 2015/16 production (including blackcoal destined for exports and electricity generation but not including final combustion). . 21Table 11: GHG emissions intensity for whole life-cycle of CSG – LNG production and combustionin Asia for electricity generation in units kg CO2/t LNG taking account of the 1.50% loss (on aproduction basis) of methane due to fugitive emissions from upstream operations. 22Table 12: Proportion GHG emissions by unit process . 23Table 13: GHG emissions intensity of electricity production for open cycle gas turbine (OCGT),and closed cycle gas turbine (CCGT): units t CO2-e/MWh. . 23 v

AcknowledgmentsThis project is supported by the Gas Industry Social and Environmental Research Alliance (GISERA).GISERA undertakes publicly-reported independent research that addresses the socioeconomic andenvironmental impacts of Australia's natural gas industries. For further information, visitwww.gisera.csiro.au.The work was undertaken in collaboration with the Integrated Sustainability Analysis (ISA) group inthe School of Physics at the University of Sydney. The authors would like to thank gas industryrepresentatives who provided access to facilities, environmental and financial data and reportinginformation. Without this co-operation this study would not have been possible.vi

Executive summaryAustralia has become a significant exporter of Liquefied Natural Gas (LNG) with exports predictedto increase from 17bn in 2015-16 to an expected 42bn in 2021-22 as Australian natural gas is soldin international markets to Japan, China, Korea and India.This research project seeks to fill gaps in our understanding of GHG emissions associated with theAustralian CSG-LNG industry in the production and export of natural gas. This work also comparesthe relative GHG emission impacts of CSG compared with Queensland thermal coal whencombusted for generation of electricity in Australia.A unique feature of this research project is the use of commercial-in-confidence data from a CSGto LNG project in the Surat Basin, Queensland to provide for the first time accurate estimates oflife cycle GHG emissions associated with CSG-LNG operations in Australia. Data from companyaccounts has been collected over two financial years and (2015/16 and 2016/17) before andduring commissioning of the LNG trains, and then harmonised to estimate GHG emissions, basedon a future output scenario. The future output scenario assumed production of CSG at 576petajoules (PJ) per year, comprising 100 PJ directed to the Australian domestic market, and 476 PJsent as feedstock for production of LNG.This study uses two separate approaches to estimate emissions from different components of thegas supply chain. These assessment methodologies are multi-regional input-output (MRIO) andlife-cycle assessment (LCA). Using these two methodologies, this study estimated Scope 1(‘direct’), 2 (‘indirect’) and 3 (‘external’) emissions for upstream CSG operations to LNGproduction. Estimation of emissions occurring from shipping, regasification and combustion ofnatural gas in Asia are calculated separately.MRIO is an established method for obtaining an account of carbon emissions attributing them tothe consumption of goods and services (products). MRIO is comprehensive and mathematicallycomplete in estimating the total direct and indirect GHG emissions from the company’s operationsin Australia.The LCA methodology, conducted using established procedural methods, converted raw inventoryand CSG production data into GHG emissions. This approach utilises mass and energy balancesover each unit stage of the production process (CSG extraction, water treatment, processing,pipeline compression and transport, and liquefaction) to calculate GHG emissions estimates perunit of production. The LCA analysis provided emissions estimates for CSG and LNG productionthat also included shipping, regasification, and combustion components that occurred outsideAustralia.For the purposes of the MRIO and LCA methodologies in this research project, emissions scopeswere defined as: Scope 1 - emissions directly due to activities within the company during production of CSGand LNG;Scope 2 - all indirect emissions associated with generation and transmission of electricityused by the company to produce CSG and LNG; andScope 3 - emissions are also indirect and external to the company, and they refer toemissions associated with production of goods and services that the company haspurchased. vii