Hunter Group says CCTS market has hit slow waters, eyes significant ship demands in decade’s latter half

The carbon capture, transportation, and storage (CCTS) market is developing slower than expected, according to Oslo-listed Hunter Group, which has pinned the responsibility for the trend onto technical hurdles and cost challenges.

The company is using its experience from the gas and tanker industry to develop a ship design for liquified CO2 carriers and is currently in the final stages of the development phase.

In March 2023 the company teamed up with DNV classification society on the development of a low-pressure mid-stream shipping solution for carbon capture and storage.

The parties are developing a 40-70K cbm liquified CO2 carrier with 20-30K cbm feeder vessels aiming to meet defined targets towards a sustainable CCS shipping solution to be operated on the Norwegian Continental Shelf and European waters.

The duo will be looking at technological and operational measures as well as hull and cargo tank designs.

They will also evaluate alternative fuels such as ammonia, methanol, fuel cells and CO2 abatement technologies as part of this project.

During the first quarter of the year, the group established Hunter Carbon Carriers, a company intended for the ownership and operation of future CO2 carriers. As explained by its parent, HCC is on a mission to become a leading CO2 shipping company.

“We have continued to make considerable design advancements for the next generation of liquefied CO2 carriers. This process is progressing as planned,” Hunter Group said.

“However, while we remain strong believers in CCTS’ (Carbon Capture, Transportation and Storage) ability to play a key role in the fight against climate change, we also recognize that the CCTS market is developing slower than expected. This is primarily due to lower-than-expected technological efficiency and cost challenges. Any significant  ship requirements are likely to materialize in the latter part of this decade.”

Hunter Group’s business strategy is relying heavily on the anticipated surge in demand for CO2 seaborne transportation.

Namely, the world is currently emitting around 37 billion tons of CO2 annually. CCS is widely acknowledged as a pivotal strategy in achieving global decarbonization by 2050.

As a significant portion of captured CO2 will require seaborne transportation, the development of sustainable shipping solutions becomes paramount.

The company believes that if only a small fraction of the targeted 6 billion tons of captured CO2 in 2040 is to be transported on ships, the number of ships needed will be huge.

Ships inherently offer advantages for CO2 transportation, including flexibility, cost-effectiveness, and expedited construction timelines. In contrast to alternative transportation methods, ships offer an efficient and adaptable solution.

At present, the count of such vessels stands at zero, with a handful of projects taking shape.

Separately, Hunter Group added that it was making significant progress with another ‘exciting project’, which also is a strong potential climate change fighter. The company is currently in advanced negotiations with key counterparties and suppliers.

“We expect these negotiations to be concluded by the end of September. But, as always; nothing is agreed until everything is agreed,” the company said.

However, further details were not disclosed.

With the recent reverse share split completed, the company’s planned reorganization has been implemented.

To remind, in 2018 Hunter Group’s subsidiary, Hunter Tankers invested around USD 700 million in the construction of eight newbuild eco scrubber-fitted VLCCs at DSME in South Korea. The investment was later enlarged to 12 ships.

The ships were delivered between August 2019 and July 2020, and were employed in both the spot and time charter markets.

The VLCCs were gradually divested and the final ship was sold in 2022. 

Hunter Group reported total revenue of $0.37 million year-to-date and a net profit loss of $2.4 million.

The company added that it has a remaining liquidity runway of approx. 3.5 years.