The month of August witnessed a surge in climate-related developments, with a notable spotlight on carbon capture, utilization, and storage (CCUS) announcements. CCUS, historically the black sheep of the climate tech flock, has now gained momentum as a viable solution while enabling oil and gas companies to be at the forefront of the fight against climate change. Support from government funding and the example set by industry leaders validate the criticalness of the role of Green Molecules in the future of energy. Investment in Green Molecules is now more important than ever in this pivotal moment for the natural gas industry. Energy Capital Ventures is proud to be the only platform dedicated to investing in Green Molecules technologies and we’re excited to see how advancements in CCUS better position the natural gas industry.
The federal government made a historic $1.2 billion investment announcement, earmarked for the development of two commercial-scale direct air capture (DAC) facilities in Texas and Louisiana.
Occidental, driven by CEO Vicki Hollub's vision of being in the "carbon management business," announced plans to acquire Carbon Engineering Ltd. for around $1.1 billion. Occidental's collaboration with Carbon Engineering on DAC technology since 2019 underscores its commitment to CCUS. The company intends to build approximately 100 DAC plants for producing products like concrete and aviation fuel from captured carbon, furthering its dedication to carbon removal solutions. Part of this funding will contribute to building Stratos, a DAC plant expected to capture 500,000 tonnes of carbon dioxide from the atmosphere annually when it is fully operational in 2025, in Ector County, Texas.
Equinor has acquired a 25% stake in the Bayou Bend Carbon Capture and Storage (CCS) project in the United States. The Bayou Bend project is operated by Chevron and covers both onshore and offshore areas where CO2 is captured from industrial emitters, such as cement, steel or chemicals. This is Equinor's first "firm investment" in a U.S. CCS project. The Bayou Bend project is positioned to be one of the largest CCS solutions in the US for industrial emitters, with nearly 140,000 gross acres of pore space for permanent CO2 sequestration and gross potential storage resources of more than one billion metric tons.
The oil and gas industry, under increasing pressure to reduce carbon emissions and align with climate goals, is poised to drive further announcements in the CCUS sector. This technology provides a means to mitigate emissions, diversify business portfolios, and leverage existing subsurface engineering expertise. Oil and gas companies can leverage their knowledge and resources to develop and deploy CCUS projects effectively, making CCUS a means of diversification while leveraging existing competencies. CCUS offers an opportunity to invest in technologies and services related to carbon management, potentially opening up new revenue streams. There also exists synergies with existing operations that would offset CCUS costs. CCUS can be used in conjunction with enhanced oil recovery (EOR) operations. Injecting captured CO2 into oil reservoirs can increase oil production, making it economically attractive for oil companies.
First Movers: Initial CCUS adoption will be driven by industries whose operations and supply chains share synergies with CCUS deployment needs. For example, Occidental is well-positioned to stimulate CCUS investment because of its extensive experience in subsurface operations and infrastructure management – skills transferable to CCUS projects. Secondly, Occidental's financial stability from its core operations provide a robust financial foundation for capital-intensive CCUS investments. Lastly, the company's access to a well-established supply chain and a skilled workforce streamlines the development and deployment of CCUS projects, further solidifying its position as a key player in emissions reduction efforts.
Future Investment: CCUS demand will be driven by industries with high concentrations of point source emissions. In the near term, companies will continue to focus deployment of CCUS in low-cost sectors like natural gas processing, ethanol, hydrogen and upstream gas production. As supportive policy continues to develop and the infrastructure of a CCUS industry grows simultaneously, the logistics for other hard-to-abate industries will become more economic. Cement, steel and chemical production will be more active in the investment space as these factors continue to evolve.
Geographic Trends: Locations characterized by favorable energy costs, political support, a skilled labor force, and accessible materials will become focal points for increased CCUS activity and investment. The Gulf region is emerging as a pivotal hub for carbon capture and storage efforts due to the high number of industrial emitters, favorable regulatory support, and beneficial geological conditions. Wyoming, Colorado and Montana follow close behind with high sources of emissions and favorable storage capacity. We anticipate more announcements of major projects in these regions as the market continues to mature.
These Green Molecules announcements and trends are positioning the oil and gas industry for unprecedented growth and a tremendous opportunity to lead the fight against climate change. As part of our commitment to investing in Green Molecules, Energy Capital Ventures believes CCUS will play a critical role in the energy transition. We are actively looking for entrepreneurs who are developing and deploying CCUS solutions.
If you or someone you know is active in the space, please reach out to our team!