Oxy, Enterprise Products Signal Interest in Joint Project To Build CCS Network Along Texas Gulf Coast
The US oil and gas company said it signed a letter of intent with the US midstream operator to explore commercializing a CO2 transportation and storage network.
A proposed joint project between Occidental Petroleum (Oxy) and Enterprise Products is the latest sign that US energy companies are increasingly eager to monetize CO2 storage.
This week, the US oil and gas company and pipeline operator announced a tentative agreement to begin exploring a CO2 transportation and storage network for industrial sources of emissions along the Texas coast.
Locations for the proposed CO2 capturing included the Houston area along with neighboring cities Beaumont and Port Arthur, both of which form part of the US Gulf Coast petrochemical complex.
The carbon capture and storage (CCS) scheme being discussed would combine the two companies' assets; however, a target capacity for CO2 storage was not mentioned in the joint announcement.
Houston-based Oxy produced more than 1.1 million BOE/D in 2021 and is the top acreage holder in the prolific Permian Basin. The oil company said the CO2 storage hubs it is developing along the US Gulf Coast would be involved in the proposed project.
“The hubs will provide access to high-quality pore space and efficient transportation infrastructure, bringing more options to emitters looking to explore more viable carbon management strategies,” read the announcement.
Oxy said last month it has three hubs under construction that should be ready for injections by 2025. Recent company presentations also show that each of these hubs will include at least three injection wells, five monitor wells, and cover some 30 surface acres.
It was added in the new announcement that Oxy’s planned expansion of direct air capture (DAC) facilitieswill provide point-sources for some of its new injection hubs.
Oxy is constructing a 1 mtpa DAC facility in the Permian that it says will cost between $800 million and $1 billion. By 2035, Oxy is aiming to build up to 70 such 1-mtpa DAC facilities.
Houston-based Enterprise is one of the largest midstream companies with more than 50,000 miles of pipelines. The collaboration would utilize some of those existing pipelines, but Enterprise said it may also build new ones to move captured CO2 to Oxy’s injection sites.
Oxy and Enterprise said they are now reaching out to potential industrial customers to assess the market for such a CO2 network. They did not offer guidance on when a deal could be struck to launch the joint project.
The potential development and other recent announcements highlight how the Texas Gulf Coast has become a prime piece of real estate for oil and gas companies looking to operate major CCS projects. Among the driving factors behind the various proposals are US tax credits that offer $50 per metric ton of CO2 that is permanently sequestered.
Announced nearly 2 years ago, ExxonMobil is in discussions with more than a dozen companiesto build a 100-mtpa CCS hub by 2040 in the shallow waters off the greater Houston area. The fate of this megascale development remains pending, however, as ExxonMobil is seeking private and government support to help cover what it expects will be a $100 billion capital project.
Houston-based independent Talos Energy may be among the first to help scale up CCS along the Texas Coast with its two planned projects, the first of which may be on line by 2024.