Australian independent Santos is teaming up with local polyethylene and polymer producer Qenos to carry out a feasibility study that could see it supply blue hydrogen to New South Wales.

Santos confirmed it will carry out the study with Qenos, which will look at the use of hydrogen to reduce carbon emissions at the latter’s Port Botany operations.

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The pair will study the feasibility of Santos supplying up to 2 petajoules of blue hydrogen per annum, produced using natural gas, which could replace some of the ethane feedstock that has underpinned Qenos’ Port Botany operations for the past 25 years.

The study will also assess using hydrogen in an advanced recycling project that Qenos is currently progressing to help address Australia's plastic waste problem.

“Our advanced recycling project will put us on the path to a circular economy, using plastic waste as a feedstock in addition to ethane. The potential to use clean-burning hydrogen in this project is also very exciting,” said Qenos chief executive Stephen Bell.

“This partnership is a great example of collaboration across the value chain to deliver better outcomes for our customers. With plastic use in Australia set to double by 2050, I am delighted Santos and Qenos are working together to explore new supply arrangements and ways of reducing emissions within Australia’s manufacturing industry.”

The agreement comes just days after Santos sanctioned its Moomba carbon capture and storage (CCS) project in South Australia.

The Moomba CCS project is expected to start up in 2024 and will initially capture and store 1.7 million tonnes of carbon dioxide emissions per annum.

Santos estimates the lifecycle cost of the Moomba CCS project at less than US$24 per tonne of CO2, including cash costs in operation of US$6 to US$8 per tonne of CO2.

Santos chief executive Kevin Gallagher has previously stated his company could deliver blue hydrogen at a cost of about A$2 (US$1.49) per kilogram, which would place it well ahead of the Australian government’s target of reaching that milestone by 2030.