Australia’s leading oil and gas company Santos has procured a network of depleted gas reservoirs to inject CO2 in.
According to the oil and gas major, the reservoirs have the potential to hold as much as 100 million metric tons of carbon, which could secure up to $25 million worth in carbon credits per year.
The storage reservoirs are located in South Australia and were previously used to hold natural gas.
However, they have since been repurposed and Santos has prepared them to store waste carbon dioxide from its future carbon capture and storage (CCS) project Moomba.
The company expects Moomba to capture 1.7 million tons of CO2 annually starting 2024, which means that the storage capacity of the gas reservoirs may last up to 60 years.
Santos envisions that focusing on CCS will help significantly reduce the carbon footprint of its operations, especially of the gas extraction process.
The long-term outlook of CO2 storage for Santos
The gas producer also wishes to use the carbon capture project in the production of blue hydrogen – a process that involves extracting hydrogen from natural gas and capturing much of the resulting CO2 emissions.
Santos chief executive Kevin Gallagher stated on Tuesday that CCS is a ‘critical technology’ necessary for the world to achieve its emission targets.
Aside from that, the company is by no means oblivious to how lucrative carbon storage can be.
In the same statement, Gallagher pointed out the current ever-increasing prices of carbon.
And for every ton of CO2 that Santos captures and stores, it will be able to claim one carbon credit unit, which can then be sold either to the government or on the private market, where prices are exceeding $39 per ton.
The estimated cost of capturing and storing CO2 emissions at the Moomba project will set Santos back some $24 per ton, making for a $15 profit per credit on private markets.
This, in turn, would amount to roughly $25 million worth of annual profit if the company is successful in achieving its target of 1.7 million tons of captured CO2.
Critics, however, remain skeptical of Santos’ ability to reach that target due to the poor track record of CCS projects in Australia.