The Irving oil major warned, however, that developing a so-called Houston CCS Innovation Zone — billed as the biggest carbon sequestration project in the world — would require a public-private partnership and government funding.
“We believe the time is right for a large-scale collaboration in the United States between government at every level, private industry, academia and local communities to create an “Innovation Zone” approach to dramatically accelerate Carbon Capture and Storage progress,” Joe Blommaert, president of Exxon’s new low-carbon business, said in a blog post Monday evening. “And we think Houston is the perfect place for such a concept.”
While European oil majors are investing heavily in wind and solar energy to prepare for a low-carbon future, U.S. oil giants are hanging their cowboy hats on carbon capture and storage, the decades-old, but expensive technology of extracting carbon dioxide from the air and storing it in deep underground reservoirs.
Houston-based Occidental Petroleum has a massive carbon capture project in the Permian Basin under construction to reinvent itself as a carbon capture and storage company.
Exxon’s proposal comes less than three months after the company announced plans to invest $3 billion into a new low-carbon solutions venture. The venture is investing in a portfolio of 20 carbon capture projects.
Exxon on Monday said it has been studying the concept of creating carbon capture and storage hubs around the country to help the U.S. reduce its greenhouse gas emissions. After a three-year study, the company landed in Houston because of its large concentration of carbon-emitting industries, and its location near the Gulf of Mexico that could store large amounts of carbon dioxide safely and permanently.Old oil and gas formations in the Gulf of Mexico have long been viewed as having the potential to store large quantities of carbon dioxide. Early projections show 50 million tons of carbon dioxide per year could be stored beneath the Gulf of Mexico by 2030, more than all the carbon capture and storage projects operating globally. Exxon said that figure could double by 2040.
The challenge, however, has been paying for it. Under the current regulatory environment, it’s cheaper to simply let the pollutants float away into the atmosphere.
Exxon said it believes the government ought to provide the financial incentive and regulatory framework for companies to make substantial investments in carbon capture. Exxon, which said it applauded Biden’s decision to rejoin the Paris climate agreement, urged the administration to establish a market price on carbon through taxes or other market mechanismsto drive investment in the space.
Exxon’s proposal calls for the company along with many private and public partners to build a carbon capture facility to collect emissions from refineries, petrochemical plants and other industrial facilities along the Houston Ship Channel. Carbon capture zones are also being considered in the U.K. and Rotterdam, although the project proposed for Houston would be much larger in scale.
The Energy Department estimates the U.S. Gulf Coast has enough storage capacity to hold 500 billion metric tons of carbon dioxide, more than 130 years of the country’s total industry and power generation emissions based on 2018 data.
Exxon Mobil,, under pressure from investors over its environmental record and recent financial returns, didn’t say how much it would invest in the project. The oil major recently cut its capital budget to the lowest in two decades to protect its $15 billion-a-year dividend.
Last year, the company put a smaller, but easier to implement carbon project in Wyoming on hold due to the economic fallout from Covid-19. It would have cost about $260 million, or less the 1 percent of what Exxon is proposing for the Gulf Coast.
Still, Exxon’s proposal was met with applause from The Greater Houston Partnership, the region’s economic development organization. The group has called for massive investment and innovation to help the oil-and-gas-dependent city prepare for the so-called energy transition.
“The rapid-scaling of carbon capture and storage technology and infrastructure is critical to the global energy transition to a low-carbon future,” Bobby Tudor, chair of the Partnership’s Energy Transition initiative and chairman of Houston-based energy investment firm Tudor, Pickering, Holt, and Co. “The concept unveiled by ExxonMobil for the Houston region is a key milestone in this effort.”
