The Carbon Corner - Issue #1

The Carbon Corner - Issue #1

The inaugural edition of the Carbon Corner drops today.

The Carbon Corner is the definitive newsletter for carbon capture topics. We will cover topics such as site selection & development, legislation, regulatory and permit activity, operator updates, emitter data, project financing, and M&A.

We will be publishing this newsletter at the end of each week moving forward. I hope you enjoy it!

Wyoming races to catch the CCUS pack with DAC

CarbonCapture Inc., the latest in a series of CCUS developer startups, has announced that their 5 million tonnes per year direct air capture (DAC) project in Wyoming will proceed as planned following the passage of the IRA legislation.

The project is notable for its scale; the largest DAC project ever proposed. Wyoming was selected as a sequestration site partly due to its favorable primacy in governing US EPA Class VI injection wells and favorable geology.

CarbonCapture, Inc. and its partners believe the project could inject CO2 as early as late 2023. This would put the project ahead of other notable DAC projects like Oxy’s Permian joint venture with Carbon Engineering.

California Turns Up the Heat on CCUS Criteria

This week, California tightens its regulations on what is classified as carbon capture. As seen in other corners of the carbon capture marketplace, environmentalists are wary of allowing oil and gas companies to participate in subsidies for carbon removal via enhanced oil recovery projects. California codified this sentiment at the end of the state’s most recent two-year legislative session.

California has passed a series of climate bills setting a 2045 net-zero carbon goal, establishing carbon capture guidelines, banning new oil wells from residential areas, extending the timeline to keep Diablo Canyon Nuclear plant open for another five years, and more. The flurry of activity came at the end of the two-year legislative session.

Splitting the Baby: Point Source or DAC?

Industry has been patiently anticipating the incentives necessary to encourage carbon dioxide sequestration. Exxon Mobil estimates the market to be worth up to $2 trillion per annum by 2040. Of the two types of CCUS projects identified (point source and Direct Air Capture, or ‘DAC’), point source emissions offer the larger immediate price for integrated CCUS projects in the coming decade.

Norwegian carbon dioxide (CO2) storage company Northern Lights and its owners have agreed to store emissions captured at fertilizer-maker Yara’s Dutch operation from 2025 in what they say is a commercial breakthrough for the business.

CCUS will be most relevant within major point source emitters, like ethanol and renewable fuels, refining, steel, iron ore production, and mining.

The Chinese Enter the CCUS Fray

Sinopec is ready to participate in the CCUS wave.

The company recently announced its first CCUS project, which will average 0.6 million tonnes per year of injection into over 70 oil wells in the Shandong province. The carbon dioxide utilized for the project will be a byproduct of a hydrogen plant.

Historically, this would have simply been known as an Enhanced Oil Recovery project (a CO2 flood), but the Chinese are determined to cast a positive light on their efforts to curb carbon emissions.

Opposition Threatens CCUS Megaprojects

CCUS pipeline megaprojects may be entering troubled waters.

Farmers are banding together to disrupt the progress of the massive Navigator pipeline project in the Midwest. Opposition centers on the belief that the proposed carbon dioxide pipeline project could impact farming and negatively impact aquifer quality (among other claims).

While the company seems to have its work cut out, the improvements to the 45Q tax credit provide a financing tailwind that hasn’t existed until recently.

That's all for the first edition! Thanks for joining us to catch up on the latest happenings in Carbon Capture & Sequestration.

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Schaper Energy Consulting

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