The purchase reflects the rise of greenhouse gas reduction schemes offered to oil, power and petrochemical industries and tax credits available for carbon capture and storage (CCS) projects.
Milestone sees permanent carbon storage as an extension of its oil waste disposal in top U.S. shale fields, said CEO Gabriel Rio. Carbon collection and disposal revenues could eventually match its oilfield waste revenues.
The company plans two carbon dioxide (CO2) storage projects in the Permian Basin, the top U.S. shale oilfield, where it now collects and buries drilling waste and oil-contaminated water. The first could begin injecting CO2 as soon as 2025 and store 2.5 million tons of carbon per year, he said.
Milestone will complete against Exxon Mobil (XOM.N), Occidental Petroleum (OXY.N) and Chevron (CVX.N) developing storage projects in Texas and Louisiana. Its relationships with oil and gas producers and wastewater disposal well experience can overcome worries about its size, Rio said.
"We really understand the geology and how to put waste streams back into the ground and keep them safely away from groundwater and permanently secure," Rio said.
The firm, which generates between $100 million and $300 million in revenue, accounts for a significant part of the money now spent on oil waste management in Texas's two largest shale fields, estimates Amar Gujral, managing director at LEK Consulting.
SK Capital Managing Director Jack Norris, who oversees materials and chemicals investments, said his company is providing a "capital structure for Milestone that enables it to execute its strategy." He would not divulge its investment in Milestone nor what it will make available for the carbon storage projects.
Newer carbon disposal firms face hurdles in convincing industrial emitters to put their faith in small companies, said Charles McConnell, executive director of the Center for Carbon Management in Energy at the University of Houston.
"This is not a marketplace today for late entry companies," he said, adding emitters want deep-pocketed suppliers. "It's a nascent industry where everyone is looking at 'who's going to hold the bag?'" in event of leaks, he said.
Graham Bain, a vice president at consultants Enverus Intelligence, said there will be more oilfield companies pivoting to CO2 storage.
"There is definitely room for smaller players" in the Permian that can leverage wastewaste disposal infrastructure and relationships with oil producers, he said.
