Denbury Moving Forward on Two More CCS Projects in Louisiana

A great deal of attention has been heaped on the carbon-capture industry over the past couple of years, from its inclusion in major federal legislation such as 2021’s infrastructure bill and last year’s Inflation Reduction Act, plus all sorts of recently announced carbon sequestration projects. Still, there are plenty of concerns that the technology is not fully baked, that many of the projects are not ready for prime time, and that few have the practical know-how to deploy carbon capture and sequestration (CCS) at scale. But what if there was a company that has been doing carbon sequestration for a very long time — decades in fact? And what if that company has built out a huge carbon dioxide (CO2) collection, distribution and sequestration system on the Gulf Coast along with concrete plans for a massive expansion of this network to capture a lot more manmade, “anthropogenic” CO2, not in decades but in just a few short years? A company like that would be pretty much the ideal acquisition candidate for a cash-flush multinational with big ESG goals and strategies, right? As we discuss in today’s RBN blog, that is just what is happening with ExxonMobil’s acquisition of Denbury, a deal that will create today’s undisputed leader in CCS.

Many may have nits to pick with the Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) — some may not like one or both at all — but it would be hard to argue with the view that they provide generous financial support for the production of clean hydrogen and the capture and sequestration of carbon dioxide (CO2). And now, with a clearer understanding of the tax credits that will be available going forward, companies active in the clean hydrogen and carbon capture and sequestration (CCS) spaces are scrambling to advance large-scale projects that would benefit from the federal government’s largesse. That includes blue methanol plants, which produce a super-low-carbon version of the petrochemical intermediate and shipping fuel by capturing and sequestering most of the CO2 that is generated during production. In today’s RBN blog, we look at the blue methanol projects taking shape along the Gulf Coast.

Given all the recent attention, you’d think the prospects for carbon-capture project development are fantastic. In the U.S., last year’s Inflation Reduction Act (IRA) featured significant increases in the 45Q tax credit for carbon sequestration, improving the economics for a wide range of carbon-capture projects. On a global level, it seems clear that efforts to reduce greenhouse gas (GHG) emissions and reach a net-zero world will continue for a long time to come. Nearly every plan to reach that target includes a significant reliance on carbon capture, with the International Energy Agency (IEA) forecasting that 7,600 million metric tons per annum (MMtpa) of carbon dioxide (CO2) — that’s 7.6 gigatons per year — will need to be captured and sequestered by 2050. We are a long way from those levels, given that most estimates put global carbon-capture capacity at a little more than 40 MMtpa today, or less than 1% of what the EIA thinks we’ll need in less than 27 years. In today’s RBN blog, we look at the main factors holding back the wider commercialization of carbon-capture initiatives in the U.S.