Move over Twiggy, here's why Santos' (ASX:STO) boss is focused on blue hydrogen

Santos is taking on net-zero with blue hydrogen, but not everyone is pleased about it…

| More on:
Hydrogen bubble in blue

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Santos Ltd (ASX: STO) share price will likely have a captivated audience on Thursday. Australia's second-largest independent oil and gas company has drawn some attention after its prominent display at the COP26 climate summit in Glasgow.

The event hosted appearances by several Australian companies seeking to display their climate-targeted efforts. Attendees included Andrew 'Twiggy' Forrest's green-hydrogen protégé Fortescue Future Industries, alongside Sun Cable and Santos.

However, some criticism has been voiced regarding Santos' prominent featuring at the event. Yet, Santos CEO Kevin Gallagher is adamant the company's 'blue' hydrogen strategy is a winner.

Let's take a look at what unfolded.

ASX-listed Santos turns up the heat at COP26

Santos has not been secretive about its ambitions to be net zero emissions by 2040. The 67-year-old Australian oil and gas giant believes it can reinvent itself by utilising new technologies. One important tool at its disposal is carbon capture storage. This is an essential ingredient for Santos in its proposed blue hydrogen production.

On Monday, Santos announced it had decided on proceeding with its $220 million Moomba carbon capture and store (CCS) project. The project, which is expected to be completed in 2024, is expected to capture 1.7 million tonnes of carbon dioxide per year. By using CCS, Santos will be able to burn natural gas in a low-emission manner.

Following the announcement, Santos CEO Kevin Gallagher has shared the opinion that fossil fuel companies will need to transition to new energy sources "or die". In addition, the CEO pointed out that Santos is looking at green hydrogen plants. Although, Gallagher thinks that it won't be economically viable for a decade.

Despite its endeavours to go net-zero, some participants at the COP26 summit weren't happy with Santos' featuring. In fact, former prime minister Malcolm Turnbull went as far as calling ASX-listed Santos' appearance "a joke".

While the proposed project would enable the capturing of CO2, the company would likely be using this in conjunction with gas extraction. A concept that isn't quite as green as producing energy directly through renewable sources.

What is blue hydrogen?

While green hydrogen is made by using renewable energy, blue hydrogen takes a different approach. Specifically, natural gas is burnt, with hydrogen being produced from the steam that is generated. From there, the carbon dioxide emissions are stored underground using carbon capture storage.

Gallagher is sceptical of renewables catering for all of the hydrogen required by 2050. Instead, blue hydrogen could fill this gap, as Gallagher stated, "We believe we can get it (blue hydrogen) to market quicker, and we have an abundance of natural gas in Australia which becomes a competitive advantage."

Finally, ASX-listed Santos is trading at $6.86, down 2.83% at the time of writing.

Should you invest $1,000 in Santos Limited right now?

Before you buy Santos Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Santos Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Energy Shares

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Share Gainers

Boss Energy shares have rocketed 90% in a month. Here's why

The massive rally in Boss Energy shares will be painful to the host of short sellers betting against the uranium…

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

ASX 200 energy shares plunge on shock OPEC move

ASX 200 energy shares like Woodside and Santos are tumbling on Monday. Let’s find out why.

Read more »

Female oil worker in front of a pumpjack.
Energy Shares

Should you buy Woodside shares in May?

Is this energy giant a good investment right now?

Read more »

Hand holding out coal in front of a coal mine.
Energy Shares

Down 20% this year, are Whitehaven Coal shares a buy, hold or sell according to Macquarie?

Here’s what’s in store for this Australian independent coal producer.

Read more »

Rocket powering up and symbolising a rising share price.
Energy Shares

Guess which ASX uranium stock could rocket 45%

Big returns could be on offer from this stock. Let's see what Bell Potter is saying.

Read more »

A miner stands in front of an excavator at a mine site.
Energy Shares

3 ASX 200 uranium shares soaring 10%-plus today

What has got investors excited today?

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Woodside shares higher on 'game-changer' news

Let's see what the energy giant has announced on Tuesday.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Paladin Energy shares have surged 32% in 2 days. Macquarie says that's the tip of the iceberg

After a tough year, the future is looking brighter for Paladin Energy shares.

Read more »