U.S. Ready for Offshore CCS if Policies are Right, Industry Says

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The U.S. could replicate the storage capacity for carbon dioxide (CO2) already established in other parts of the world with the right policies in place, the National Ocean Industries Association said Wednesday.

Major energy companies are deploying significant capital toward carbon capture and storage (CCS), as well as utilization and storage (CCUS), technologies during the era of the energy transition.

The first large-scale offshore CCS facility was commissioned off the coast of Norway in 1996. Construction on the new Northern Lights project is underway; once operations begin in 2024, it could store as much as 1.5 million metric tons of CO2 per year, with a goal of reaching 5 million metric tons per year by 2027. Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals, Oil & Gas Pipelines, Power and Metals & Minerals project databases can click here for related project reports.

"In the U.S., the Gulf of Mexico is well-suited for the development of projects like Northern Lights," according to a policy paper from the NOIA.

The U.S. Department of Energy estimates the area beneath the U.S. territorial waters of the Gulf of Mexico could hold about 500 billion metric tons of CO2, the loose equivalent of 130 years of emissions from the nation's industrial and power-generation sectors.

Last year, 11 different companies, from Chevron Corporation (NYSE:CVX) (San Ramon, California) to Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas), expressed interest in developing large-scale CCS technology in the Houston area. They already are discussing plans to capture as much as 50 million metric tons of CO2 per year by 2030. For related information, see December 2, 2021, article--Chevron Plots $15 Billion in '22 Capex as it Juggles Drilling, Carbon-Reduction Plans.

"We're reimagining what it means to be the energy capital of the world, and applying proven technology to reduce emissions is one of the best ways to get started," said Houston Mayor Sylvester Turner in a statement.

To realize those ambitions, however, the NOIA said U.S. policymakers need to create a framework that incentivizes those developments. As developments offshore Norway show, CCS is commercially feasible, but it is expensive.

The U.S. Department of Interior, along with state governments, should draft regulations that provide interested parties greater access to the geological formations suitable for CO2 storage. Elsewhere, NOIA said, lawmakers should amend tax codes to provide greater incentives and offer grants to help develop the CCS industry offshore.

NOIA President Erik Milito said the U.S. waters of the Gulf of Mexico are attractive for CO2 storage, but a predictable and sound policy framework is necessary to move forward.

"The technical and commercial feasibility of CCUS is being demonstrated on the global stage, and the right policies can enable the advancement of this remarkable emissions reduction opportunity here at home," Milito said.

Most of the CO2 sequestered by these technologies is stored permanently, though it does have end uses such as deployment for enhanced oil recovery.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.