The project has been promoted by Chevron and the federal government as the world's largest successful CCS project, with the capacity to inject 4 million tonnes of CO2 equivalent per annum, and 100 million tonnes over the life of the project.
It has yet to hit nameplate, having only injected 5 million tonnes in its first five years of the LNG plant's operation.
Chevron was supposed to start injecting CO2 from offshore reservoirs into a sandstone layer 2000 metres underground when Train 1 came online in March 2016.
Project delays and technical difficulties led to costly timeline blowouts with CO2 injection operations beginning three and a half years later in 2019.
Technical issues have continued to plague the facility, with the wells designed to move the water to make way for the CO2 clogged with sand during testing.
The purchased offsets and investment are designed to cover the five-year period between 2016 and July 2021, which is when Chevron announced it would fail to achieve its injection target.
Chevron Australia managing director Mark Hatfield said the company was proud of the significant emissions reductions being achieved, despite its early challenges.
"The Gorgon carbon capture and storage system has safely injected approximately 5.5 million tonnes of greenhouse gas emissions and is demonstrating the importance of CCS technology in advancing a lower carbon future," he said.
Hatfield said the company took its regulatory obligations seriously and the package "will see us make good on our commitment to offset the injection shortfall".
With the current spot price of Australian Carbon Credit Units at A$36.75 per tonne of CO2, Chevron's offset bill and the lower carbon projects could total around $230 million.
"We look forward to further discussions with the Western Australian Government to develop lower carbon projects and unlock emissions reduction potential across the state," Hatfield said.
Chevron did not specify in its statement where it would source its offsets, however, according to its Environmental Performance Report released this month, it said it would rely on ACCUs, and international programs the Gold Standard and the Verified Carbon Standard.
The report said that the proportion of ACCUs to be acquired and surrendered will depend on the availability and impact on the ACCU market.
Last year the WA Environmental Protection Authority ordered the company to play catch up on the level of CO2 emitted from the LNG project.
The authority said Chevron must "implement all practicable means to inject underground all reservoir carbon dioxide removed during gas processing operations of the gas treatment plant."
It must also "ensure that, calculated on a five-year rolling average commencing on 18 July 2016, at least 80% of reservoir carbon dioxide removed during… operations that would otherwise be vented to the atmosphere is injected underground".
The state government could not be reached for comment.
Chevron operates the Gorgon LNG project and holds a 47% interest, ExxonMobil and Shell have a 25% stake each, while Osaka gas has 1.25%; Tokyo Gas has 1% and JERA as 0.4%.
The Conservation Council of Western Australia released a statement demanding the state government punish Chevron for its failures and to shut down the project until the CO2 injection system is working at full capacity.
"Chevron has been taking the regulator, and WA community for a ride on this for years and frankly it has turned into an international embarrassment," CCWA policy and legal director Piers Verstegen said.
"A very high penalty must be applied to send a clear message to Chevron and other polluters that this kind of breach is unacceptable."
Chevron has always been adamant that, given the first-of-its-kind nature of Gorgon, technical issues at the plant were going to be somewhat of an inevitability, with Hatfield describing it as a "pioneering endeavour".
At the same time, oil and gas players promoting CCS have said the technology behind the concept has been well-established for years, historically in the role of enhanced oil recovery.
Woodside CEO Meg O'Neill told a panel at the COP26 conference this week that CCS technologies in Australia were in "fairly early days", saying her company would continue to rely on offsets to neutralise its emissions.
Clean State director Olivia Chapman told Energy News the WA government needed to move away from its reliance on the oil and gas sector if it was serious about achieving net-zero emissions by 2050.
"Instead of pouring millions into offsets to make up for carbon capture shortfalls, companies like Chevron and our governments should be investing in clean and renewable technology - that is where the rest of the world is heading," she said.