Shares in Santos Ltd (ASX: STO) has dipped this morning amid reports its CEO has warned of the importance of carbon capture and storage (CCS) in the Australian energy sector.
At the time of writing, the Santos share price is $7.11, 0.35% lower than its closing price yesterday.
However, it's performing better than the broader market today. Currently, the S&P/ASX 200 Index (ASX: XJO) is down 1.08%.
Let's take a look at what Santos' CEO Kevin Gallagher has to say about CCS.
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'Essential' for Australian energy companies
According to Gallagher, for Australia's energy sector to continue to attract foreign investment, gas and oil companies must employ CCS initiatives.
CCS is the process of capturing carbon before it enters the atmosphere and storing it underground so to reduce emissions.
Gallagher's comments were published by the Australian Financial Review (AFR) today. They echo those he made to the annual oil and gas industry (APPEA) conference last month.
According to the AFR, Gallagher believes Australia's expansive unused land and numerous exhausted oil and gas fields makes it better suited for CCS initiatives than other nations.
Last month, Gallagher declared many investors and lenders globally were refusing to fund gas and oil companies due to climate concerns.
Perhaps in reaction to climate concerns, Santos has partnered with Beach Energy Ltd (ASX: BPT) to build a CCS project in South Australia. Santos successfully completed the final trial at the Moomba project in October. As part of the trial, the company injected 100 tonnes of carbon dioxide into depleted gas reservoirs at the project. The company expects a final investment decision for the project in September.
Gallagher was quoted by the AFR as saying:
Carbon capture and storage is more than an opportunity, I believe it is essential for companies like Santos to have in our portfolio.
The AFR reported that Gallagher has already received strong interest in the Moomba project from Japanese and South Korean customers.
However, the Climate Council states fossil fuel companies engaging in CCS are likely to be spending 6 times more than it costs to produce renewable energy. In January, the organisation claimed there were no successful CCS projects operated by fossil fuel companies anywhere in the world.
Santos share price snapshot
Despite today's slump, the Santos share price is 10% higher year to date. It has also gained 34% since this time last year.
The company has a market capitalisation of around $14.9 billon, with approximately 2 billion shares outstanding.
