Texas-based independent exploration and production company Talos Energy and UK-based clean energy group Storegga Geotechnologies have formed an exclusive joint venture to source, evaluate, and develop carbon capture and storage (CCS) projects along the US Gulf Coast and in the Gulf of Mexico. Areas under consideration include state and federal waters offshore Texas, Louisiana, Mississippi, and Alabama.
There are no upfront capital commitments, and the partners will share costs in the initial phases on a 50/50 basis with Talos designated the operating partner.
Talos said it and Storegga will, in collaboration, “originate and mature CCS ventures with emitters, infrastructure providers, service companies, and financing partners, among others.” As individual CCS projects are matured, each will be “ring-fenced” with separate operating agreements, financing structures, and the possibility of additional working interest partners.
In announcing the joint venture, the partners said they are “actively exploring opportunities with counterparties along the CCS value chain” but did not provide details.
The announcement said the joint venture framework combines the strengths of Talos’ offshore operational and subsurface expertise with Storegga's leading end-to-end CCS project experience. Storegga is a European leader in CCS as a lead developer of the Acorn CCS and Acorn Hydrogen projects, and also is developing a cutting-edge direct air capture project. The Acorn project is the most advanced large-scale CCS project in the UK, with final investment decision (FID) expected in 2022.
Prime Location for CCS Projects
Talos said the US Gulf Coast is a prime location for offshore CCS projects, housing some of the highest concentrations of power generation and industrial and petrochemical facilities in the US, including more than 100 that emit more than 1 million tons of carbon dioxide (CO2) annually. There is also a high density of smaller private and "middle-market" industrial sites in the region that may require CCS solutions in the future.
According to Talos, this industrial network is immediately adjacent to a large natural carbon storage province in the shallow waters of the Gulf of Mexico Shelf. The area potentially holds more than 30 gigatons of available storage in geological structures with the necessary rock properties and fluid type to effectively store significant CO2 volumes.
With its long history as a prolific energy-producing region, the Gulf of Mexico also offers vast infrastructure and service networks and a capable labor force. Talos said these essential technical and commercial elements can supply the growing demand for large-scale CCS emissions solutions in one of the biggest industrial regions in the world.
Timothy S. Duncan, president and chief executive officer of Talos, said engaging in CCS projects complements the company’s operating skill set and diversifies it to seize a significant market opportunity. “We are actively working on a host of ideas and are proud to be an exclusive operating partner with a recognized leader in the rapidly evolving CCS space," Duncan said.
Nick Cooper, chief executive officer of Storegga, said, "The US Gulf Coast offers significant potential for CCS and we are delighted to be partnering with Talos.”
The announcement of the joint venture for CCS development closely followed a late May update by Talos on its ongoing environmental, social, and governance (ESG) initiatives, in which it strengthened its ESG commitments by establishing long-term emissions reductions targets and strengthening the linking of executive compensation to ESG performance.