(Bloomberg) -- Chevron Corp. will buy more than 5 million greenhouse gas offsets after its giant Gorgon project in Australia missed targets to inject captured carbon dioxide underground.
Purchasing and then surrendering the offsets will address shortfalls over a five-year period to July 17 this year, and ensure the facility meets regulatory requirements, the San Ramon, California-based energy producer said Thursday in a statement.
“The package we have announced will see us make good on our commitment to offset the injection shortfall,” the company's Australia Managing Director Mark Hatfield said.
While about 5.5 million tons of greenhouse gas emissions have been sequestered since Gorgon's storage project began in August 2019, that's fallen short of a target to capture an average 80% of emissions in the first five years of the liquefied natural gas export plant's operation.
Read more: Chevron's Carbon Capture Struggle Shows Big Oil's Climate Hurdle
Oil producers to cement manufacturers are stepping up efforts to deploy carbon capture projects as they come under pressure to accelerate work to curb emissions. Western Australia's government insisted on the storage facility as a condition for approving the $54 billion Gorgon development, which is expected to run for four decades.
Chevron's plant is designed to manage pollution produced from offshore fields that feed the LNG facility. As gas is sent to be liquefied for export, the CO2 is pumped into a reservoir more than 2 kilometers (1.2 miles) underground. The length of time taken to safely start the system led to the operation failing to meet targets, according to the company.
Chevron didn't specify how much it expected to pay to acquire the offsets. Spot Australian carbon credit units, equivalent to one ton of CO2, traded at A$36 ($26.30) on Nov. 3, according to Jarden Partners Ltd. data.
In addition to purchasing offsets, Chevron will invest A$40 million in lower-carbon projects in Western Australia, the company said in its statement.
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