Exxon eyes Houston for $100B carbon capture hub
Exxon Mobil said it believes Houston is the “perfect place” for a giant, $100 billion project to capture carbon dioxide emissions from the city’s industrial area along the Ship Channel.
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.
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 mechanisms to 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.”
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