Exxon Stakes Out Massive CCS Play

Exxon Mobil is pitching a massive carbon capture and storage (CCS) initiative in the US that would turbocharge the world's CCS capacity -- if key industry partners, policymakers and other stakeholders join in. The early-stage concept, tipped in a blog post on Exxon's website late Monday, seeks to develop a CCS industrial zone around the Houston Ship Channel. The numbers being explored would dwarf any project seen to date. Exxon hopes to partner the area's 50 largest emitters to capture and sequester roughly 100 million tons per year of carbon dioxide by 2040. That would represent 2½ times the world's currently operating CCS capacity. It would require combined investment of $100 billion or more, Exxon estimates. Development would happen in phases to optimize infrastructure and the deployment of carbon capture technology, but roughly 50 million tons/yr could be in place by 2030. The initiative signals that Exxon, like other US oil companies, is now taking calls for decarbonization more seriously, and looking to demonstrate that calls for government support -- through carbon taxes or CCS incentives -- would be backed by bold plans to act. Exxon has embraced CCS as its preferred tool to remain a major oil producer amid the global push toward cleaner energy (related). If all the boxes can be ticked around the Houston Ship Channel scheme, the company would be expected to consider it an investment priority, Energy Intelligence understands. Support Needed The Houston Ship Channel area is home to roughly 10% of the US' refining capacity, the world's second-largest concentration of petrochemicals production and numerous other emissions-intensive industries. But much work would be needed to see the plans through, including: • Top emitters would have to sign on; • Several hundred miles of new pipelines would be needed to connect the vast array of sources to sequestration sites in state and federal waters; • Federal policy support would be required, including direct investment and incentives for CCS (OD Mar.25'21). A carbon price could also be essential (OD Apr.8'21); • State, local and federal governments would need to ensure sufficient regulatory and legal regimes are in place for carbon sequestration of magnitude. Serious Scale That checklist is long. But the scale of the envisaged Houston Ship Channel project is far larger than the hub-based designs advancing in places like Teesside in the UK (up to 10 million tons/yr) and Rotterdam in the Netherlands (initial 2.5 million tons/yr) -- and, as such, could model how CCS can play a more central role in the push for global decarbonization. The concept is the culmination of three years of work at Exxon to assess multisource CCS hubs in industrial areas near geologic storage sites, including depleted oil and gas reservoirs. The company could one day scout for hubs of this scale elsewhere in the US, as well as in places like Rotterdam and Singapore, sources say, benefiting from any lessons learned around economies of scale and new CCS technology deployment. The US Department of Energy estimates the US Gulf Coast region alone could safely store more than 500 billion tons of CO2 offshore -- more than 100 years' worth of US industrial and power generation emissions. Teesside, by comparison, has roughly 1 billion tons of potential capacity. Houston, We Have a Solution The initial selection of Houston is not surprising. Besides the physical advantages offered by the ship channel's concentration of emissions sources and proximity to massive sequestration potential, the city -- known to many as the "energy capital of the world" -- wants to stay relevant in an evolving lower-carbon landscape. Mayor Sylvester Turner, a Democrat, is promoting a climate action plan that would, among other things, seek to make Houston a leader in CCS technology. He regards carbon capture as a way to help Houston become carbon neutral by 2050 without alienating an industry central to its economic fortunes. Energy Intelligence understands that early conversations with stakeholders and policymakers on Exxon's concept -- and the support elements needed -- have been well-received. There has been particular excitement around its proposed scale. Many of Exxon's peers around the Houston Ship Channel have also adopted company-level carbon emissions reduction targets -- and in some cases, net-zero ambitions -- potentially aligning their interests with the project. Selected Key Houston