Released August 15, 2022 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Even before Congress passed the Inflation Reduction Act (IRA) of 2022 late last week, which sharply boosts tax credits for developing carbon capture and storage (CCS) projects, project developers saw a bright future for the technology, which is being developed for use by various sectors across North America. That future likely will get even brighter with the passage of the IRA, speakers predicted at an oil and gas conference in Denver last week.
Click on the image at right to see a chart of which North American industries are developing or plan to host CCS-related projects.
Industrial Info is tracking 160 proposed CCS-related projects across the U.S. and Canada, valued collectively at $79.3 billion. Nearly all of those proposed projects are scheduled to begin construction over a five-year period between January 2022 and December 2027. Subscribers to Industrial Info's Global Market Intelligence (GMI) project databases can click here for a list of detailed projects.
The availability of larger tax credits that are contained in the IRA bill, which is expected to be signed by President Joe Biden in the coming days, may drive that project count even higher.
The Chemical Processing Industry has attracted the greatest dollar value of proposed CCS-related projects, with an estimated $27 billion. Other industries in the U.S. and Canada with significant plans to develop or host CCS-related projects include Alternative Fuels, Power and Petroleum Refining.
Five states and provinces--Texas, Louisiana, Alberta, Illinois and North Dakota--account for the vast majority of proposed CCS projects.
Click on the image at right to see a listing of the top 10 states and provinces that have the greatest dollar value of CCS projects under development.
IIR doesn't expect all of these proposed projects to be built according to their current schedule. Of course, Canadian projects are not eligible for the financial support contained in the just-passed IRA legislation. Still, there is a large pipeline of potential projects.
The IRA bill will increase section 45Q credits for CCS to $60 per metric ton of carbon dioxide (CO2) stored for use in enhanced oil recovery (EOR) operations. The Section 45Q tax credit, named for the section of the federal tax code, provides financial support to companies in developing carbon CCS projects, either for permanent geologic storage of CO2 or for CO2's use in EOR projects.
The prior credit was $35 per metric ton. For permanent dedicated storage of CO2, the IRA will increase the tax credits to $85 per metric ton stored, from $50. The credits would be available for 12 years. The bill also extends the window when construction on a CCS facility must begin in order to qualify for the credits: To be eligible for the expanded credits, construction on a CCS project must begin by December 31, 2032. Previously, a facility needed to be under construction by January 1, 2026, to qualify for tax credits. Finally, the bill offers the tax-paying entities the option of receiving a cash payment option under certain circumstances.
Speaking August 9 at an oil and gas industry conference in Denver, Christian Kendall, president and chief executive at Denbury Incorporated (NYSE:DEN) (Plano, Texas), said: "CCS is fundamental to decarbonization. We're very excited about the future of CCS. Right now, there's very little being done: the world sequestered or reused in EOR projects about 40 million metric tons of CO2 in 2020. We need to get to billions of tons."
Stationary sources in the U.S. emit at least 2.6 billion metric tons of CO2 per year, he told attendees last week at a conference sponsored by EnerCom Incorporated (Denver, Colorado). The event, called "EnerCom Denver: The Energy Investment Conference," drew more than 1,000 registrants.
Denbury has secured five sites along the Gulf Coast with the potential to store more than 1.5 billion metric tons of CO2, Kendall told attendees at the Denver conference. Assuming all the necessary permits are issued, these sites could start injecting CO2 in the 2025-2026 timeframe, he added.
Click on the image at right to see Denbury's map of its CO2 infrastructure along the Gulf Coast.
Denbury already owns and operates two CO2 pipelines totaling about 500 miles along the Gulf Coast. Together, they can transport more than 27 million metric tons per year of CO2. Four of Denbury's planned five CO2 injection sites lie along or near these two CO2 pipelines, which are called the Green and NEJD pipelines.
Kendall said about 10% of all U.S. stationary CO2 emissions are located within 30 miles of the company's Gulf Coast CO2 pipeline infrastructure, making it well-positioned to benefit from a surge in CCS project development activity, particularly in an industrial corridor like the Gulf Coast.
All told, Denbury owns and operates more than 1,300 miles of CO2 transportation pipelines in two areas: the Gulf Coast and Rocky Mountains. Industrial Info is tracking two active Denbury CO2 pipeline projects under development in Montana, valued at approximately $220 million.
In addition to being a third-party transporter and injector of CO2, Denbury is an oil producer. It is expanding its Cedar Creek Anticline EOR operation, which is located in an area straddling the North Dakota/Montana border. Denbury has been extracting about 10,000 barrels per day (BBL/d) of oil from that EOR project using waterflood recovery, but it began injecting CO2 into that reservoir this past February, and it expects oil production there to jump during the second half of 2023. The CO2 injection should lead to a doubling of EOR production at Cedar Creek, to about 20,000 BBL/d by 2028.
Kendall told conference attendees--a mix of investors, analysts, bankers and industry participants--that Denbury was carbon negative for Scope 1 and Scope 2 CO2 emissions in 2021, and planned to become carbon negative for Scope 3 emissions by 2030. For energy companies, Scope 3 emissions are the biggest and toughest nut to crack because they include emissions from users of energy companies' products, including industrial firms and consumers.
Denbury was carbon-negative for Scope 1 and Scope 2 emissions because of the scale of its CO2 injections. Kendall said that "for every barrel of EOR oil we produce, we are injecting 1,700 pounds of CO2 that would otherwise be released into the atmosphere." He estimated Denbury's Scope 1 and Scope 2 emissions totaled about 160 pounds of CO2 per barrel of oil produced, and that Scope 3 emissions are about 1,000 pounds of CO2 per barrel of oil. That adds up to approximately 1,260 pounds of CO2 for every barrel of oil it produces. By injecting about 1,700 pounds of industrially produced CO2 for each barrel of oil it produces, the company is removing roughly 540 net pounds of CO2 for every barrel of oil it produces.
Click on the image at right to see Denbury's pathway to becoming carbon-negative for Scope 1, 2 and 3 emissions of CO2.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Industrial Info is tracking 160 proposed CCS-related projects across the U.S. and Canada, valued collectively at $79.3 billion. Nearly all of those proposed projects are scheduled to begin construction over a five-year period between January 2022 and December 2027. Subscribers to Industrial Info's Global Market Intelligence (GMI) project databases can click here for a list of detailed projects.
The availability of larger tax credits that are contained in the IRA bill, which is expected to be signed by President Joe Biden in the coming days, may drive that project count even higher.
The Chemical Processing Industry has attracted the greatest dollar value of proposed CCS-related projects, with an estimated $27 billion. Other industries in the U.S. and Canada with significant plans to develop or host CCS-related projects include Alternative Fuels, Power and Petroleum Refining.
Five states and provinces--Texas, Louisiana, Alberta, Illinois and North Dakota--account for the vast majority of proposed CCS projects.
IIR doesn't expect all of these proposed projects to be built according to their current schedule. Of course, Canadian projects are not eligible for the financial support contained in the just-passed IRA legislation. Still, there is a large pipeline of potential projects.
The IRA bill will increase section 45Q credits for CCS to $60 per metric ton of carbon dioxide (CO2) stored for use in enhanced oil recovery (EOR) operations. The Section 45Q tax credit, named for the section of the federal tax code, provides financial support to companies in developing carbon CCS projects, either for permanent geologic storage of CO2 or for CO2's use in EOR projects.
The prior credit was $35 per metric ton. For permanent dedicated storage of CO2, the IRA will increase the tax credits to $85 per metric ton stored, from $50. The credits would be available for 12 years. The bill also extends the window when construction on a CCS facility must begin in order to qualify for the credits: To be eligible for the expanded credits, construction on a CCS project must begin by December 31, 2032. Previously, a facility needed to be under construction by January 1, 2026, to qualify for tax credits. Finally, the bill offers the tax-paying entities the option of receiving a cash payment option under certain circumstances.
Speaking August 9 at an oil and gas industry conference in Denver, Christian Kendall, president and chief executive at Denbury Incorporated (NYSE:DEN) (Plano, Texas), said: "CCS is fundamental to decarbonization. We're very excited about the future of CCS. Right now, there's very little being done: the world sequestered or reused in EOR projects about 40 million metric tons of CO2 in 2020. We need to get to billions of tons."
Stationary sources in the U.S. emit at least 2.6 billion metric tons of CO2 per year, he told attendees last week at a conference sponsored by EnerCom Incorporated (Denver, Colorado). The event, called "EnerCom Denver: The Energy Investment Conference," drew more than 1,000 registrants.
Denbury has secured five sites along the Gulf Coast with the potential to store more than 1.5 billion metric tons of CO2, Kendall told attendees at the Denver conference. Assuming all the necessary permits are issued, these sites could start injecting CO2 in the 2025-2026 timeframe, he added.
Denbury already owns and operates two CO2 pipelines totaling about 500 miles along the Gulf Coast. Together, they can transport more than 27 million metric tons per year of CO2. Four of Denbury's planned five CO2 injection sites lie along or near these two CO2 pipelines, which are called the Green and NEJD pipelines.
Kendall said about 10% of all U.S. stationary CO2 emissions are located within 30 miles of the company's Gulf Coast CO2 pipeline infrastructure, making it well-positioned to benefit from a surge in CCS project development activity, particularly in an industrial corridor like the Gulf Coast.
All told, Denbury owns and operates more than 1,300 miles of CO2 transportation pipelines in two areas: the Gulf Coast and Rocky Mountains. Industrial Info is tracking two active Denbury CO2 pipeline projects under development in Montana, valued at approximately $220 million.
In addition to being a third-party transporter and injector of CO2, Denbury is an oil producer. It is expanding its Cedar Creek Anticline EOR operation, which is located in an area straddling the North Dakota/Montana border. Denbury has been extracting about 10,000 barrels per day (BBL/d) of oil from that EOR project using waterflood recovery, but it began injecting CO2 into that reservoir this past February, and it expects oil production there to jump during the second half of 2023. The CO2 injection should lead to a doubling of EOR production at Cedar Creek, to about 20,000 BBL/d by 2028.
Kendall told conference attendees--a mix of investors, analysts, bankers and industry participants--that Denbury was carbon negative for Scope 1 and Scope 2 CO2 emissions in 2021, and planned to become carbon negative for Scope 3 emissions by 2030. For energy companies, Scope 3 emissions are the biggest and toughest nut to crack because they include emissions from users of energy companies' products, including industrial firms and consumers.
Denbury was carbon-negative for Scope 1 and Scope 2 emissions because of the scale of its CO2 injections. Kendall said that "for every barrel of EOR oil we produce, we are injecting 1,700 pounds of CO2 that would otherwise be released into the atmosphere." He estimated Denbury's Scope 1 and Scope 2 emissions totaled about 160 pounds of CO2 per barrel of oil produced, and that Scope 3 emissions are about 1,000 pounds of CO2 per barrel of oil. That adds up to approximately 1,260 pounds of CO2 for every barrel of oil it produces. By injecting about 1,700 pounds of industrially produced CO2 for each barrel of oil it produces, the company is removing roughly 540 net pounds of CO2 for every barrel of oil it produces.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
