Oil Majors’ Carbon Capture Plans Dubbed a ‘Dangerous Delusion’

by Alastair Marsh (Bloomberg) Oil executives betting they’ll be able to meet net zero emissions goals by relying on carbon-capture technology are deluding themselves, according to an influential group of corporate bosses, bankers and academics.

The Energy Transitions Commission, whose members include senior representatives from BP Plc and Bank of America Corp., says the role of carbon capture, utilization and storage (CCUS) in slashing emissions will be “vital but limited.” However, any carbon-intensive company assuming that CCUS is a license to continue expanding production, while holding on to net zero goals, is basing its business model on “a dangerous delusion,” the ETC said in a ... READ MORE

Excerpt from Bloomberg: The bet rests on carbon capture and storage (CCS), a process that traps carbon dioxide from factories or power plants and buries it away. Oil companies have been employing the technology for decades but mostly pumped the trapped CO2 back into the ground to extract more fossil fuel. Today, there’s increasing interest in using CCS to reduce the carbon intensity of products, such as cement and steel, and even suck CO2 directly out of the air.

Deploying CCS is so energy intensive and expensive, said Emily Grubert, a professor at the University of Notre Dame. “If you're not required to do it, you're not going to do it.”

The US is only beginning to dabble with mandates for carbon capture in the form of a proposed Environmental Protection Agency requirement for some natural gas power plants to adopt the technology toward the end of the next decade. But the requirement would only apply to a sliver of gas plants, and some owners may shutter facilities — or simply curtail their operation — to avoid the regulation.

Developers also face enormous logistical and permitting hurdles — with big, project-killing fights over new proposed pipelines to carry carbon dioxide as well as the injection wells to store the gas underground. It took six years before the federal government approved the first wells. The EPA now has a list of nearly 200-and-growing awaiting review.

Some states, including Louisiana, are hoping to take the lead role vetting potential carbon storage wells within their borders, which would help ease the backlog. But those plans pit state authorities against residents who’ve spent their lives living next to petrochemical facilities and are leery of local oversight as well as the risks of residing near CO2 dumping grounds.

A lack of pipelines is an even bigger problem, particularly for ethanol factories in the rural Midwest, which can trap gas at a relatively cheap price but don't have many underground storage opportunities. Those facilities will depend on pipelines to take the gas to far-off repositories along the Gulf Coast or further north.

Proposed CO2 pipelines in the region have met fierce resistance from local landowners, with opposition prompting one group of developers to cancel the $3.5 billion Navigator Heartland Greenway project in October. The outlook is bearish for the other pipelines waiting in the wings, said James Lucier, managing director at research group Capital Alpha Partners.

“Not even tens of billions of dollars in carbon sequestration tax credits will make the pipelines move any faster,” Lucier told clients in a research note that soberly predicted no new CO2 pipelines will be built in the US before 2026.

One of the largest investments in CCS is being made in Norway. The Northern Lights project—a joint venture between Equinor, Shell and TotalEnergies—is set to capture emissions from industrial facilities or power plants. If all goes well, the liquefied CO2 will be loaded onto ships and sent to the country’s north, where a pipeline will take it offshore to put deep underground.

Many big projects have also had a spotty track record. The Chevron Corp.-led Gorgon project in Australia, which captures CO2 while processing natural gas, has never been able to operate at more than 70% of its capacity since it began operation in 2019. The world’s largest CCS project, a facilty named Century, is attached to a natural-gas processing facility in Texas. Once owned by Occidental Petroleum Corp., it had few if any technical problems, but the project’s economics were pegged to natural gas prices that cratered soon after it began operation in 2010. READ MORE