The Gulf of Mexico may be the largest potential sink for storing carbon dioxide emissions in the world — but getting the greenhouse gas under the seafloor would take a massive effort and cost.
Enter Exxon Mobil Corp.
The oil supermajor, along with other companies, is eyeing the Gulf as a prime spot to deploy carbon capture and storage (CCS) technology, considering the region’s massive potential capacity, its existing oil and gas infrastructure, and its proximity to industrial facilities where the greenhouse gas could be captured, piped and stored underneath the seafloor.
“ExxonMobil believes the greatest opportunity for CO2 storage in the United States is in the Gulf of Mexico,” said Todd Spitler, a spokesperson for Exxon’s Low Carbon Solutions business, in an email.
But momentum for carbon capture in the Gulf hit a potential roadblock last week when a federal judge invalidated the Biden administration’s November oil and gas lease sale over faulty climate reviews, consequently striking a bundle of Exxon leases that observers say were primed for the company’s first Gulf carbon storage efforts (Energywire, Jan. 28).
Exxon declined to comment on the impact of the court case, but the ruling is not expected to quell a rush of industry interest in Gulf carbon storage. However, critics are making accusations of green washing and warning of potential environmental risks, like carbon dioxide leaking into the ocean. The dynamic raises the question: How likely is CCS in the Gulf?
Proponents say very.
Exxon is part of a consortium of 14 chemical companies, drillers and refiners, including Dow Inc. and Chevron Corp., that pledged its support for large-scale carbon capture from facilities in the Houston area, backing a group proposal that aims to capture and store roughly 50 million metric tons of CO2 per year by 2030.
The proposal said the captured CO2 from across the Houston industrial area could be stored in nearby on- and offshore storage sites.
No official project has been announced, and the companies behind the proposal said this month that large-scale carbon capture deployment in the Houston area “will require the support of industry, communities and government.”
“If appropriate policies and regulations are put in place, CCS could help the United States and Houston reach net-zero goals while generating new jobs and protecting existing jobs that are important to Houston’s economy,” the companies said in a press release.
This month, Exxon joined companies in announcing a goal to reach net-zero emissions by midcentury (Greenwire, Jan. 18). It has also created a wing of its business unit to advance carbon capture and storage, hydrogen and biofuels.
“ExxonMobil’s analysis of U.S. Department of Energy estimates shows the storage capacity along the U.S. Gulf Coast is large enough to safely store about 500 billion metric tons of CO2, which is equivalent to more than 130 years of industrial and power generation emissions in the United States,” Spitler said.
Exxon isn’t alone. European giant Shell recently joined the consortium looking at carbon capture and storage in the Houston industrial area. Chevron has also explicitly expressed interest in potential carbon storage in the Gulf as part of a path to net zero.
“We view [carbon capture, utilization and storage] opportunities in two areas, reducing the carbon intensity of our existing assets and growing our carbon capture business,” said Deena McMullen, a spokesperson for Chevron.
Political leaders on Capitol Hill have responded to the industry push by tweaking federal laws to make carbon sequestration in federal waters permissible and taking steps this year to regulate where CO2 can be stored offshore, and how to do it safely.
But carbon storage has its critics, and Exxon’s interest in the Gulf is refueling allegations of green washing.
“CCS is the plan of the oil industry to keep business as usual, while claiming some kind of net-zero alignment or climate action,” said Steven Feit, an attorney with the climate and energy program at the Center for International Environmental Law, which uses law to “protect the environment, promote human rights, and ensure a just and sustainable society.”
The Interior Department role
Experts say offshore storage in the Gulf of Mexico has been a long time coming. Federal agencies and academics have long probed the subsea resources, mapping them for oil and gas deposits and in turn learning much about what the rock beneath the Gulf could potentially hold. Meanwhile, industry, highly skilled in taking gases out of the ground, says it has the expertise to reverse the process, and indeed has done so in other parts of the world.
Pumping carbon dioxide under the seafloor has been used in a handful of projects for decades, including Norway’s Sleipner offshore gas field that has been storing as much as 1 million tons of carbon dioxide annually since 1996.
In a May 2021 report, the Paris-based International Energy Agency credited the oil and gas industry as “the global leader in developing and deploying” carbon capture, utilization and storage and noted the industry could help the technology develop further because of its “large-scale engineering, pipeline, sub-surface and project management skills.”
What’s changing now is the public’s demand for climate solutions, which has goosed industry to take greater strides in storage. Criticism of oil and gas reliance has moved beyond environmental groups to foreign governments, investors and shareholders.
The social responsibility credit for being involved in large-scale carbon storage is significant in driving its growth, said Lein Mann Hansen, senior analyst in CCS and hydrogen services at Rystad Energy.
“It should not be underestimated. It is a lot to still be relevant in the financial sector,” she said.
Industry interest has also spilled into national politics, where politicians are often eager to get behind policies that fall under climate action or fossil energy reforms.
Congress appropriated billions toward carbon capture demonstration projects as part of the bipartisan infrastructure law passed last year (Energywire, Dec. 21, 2021).
Signed by President Biden in November, the Infrastructure Investment and Jobs Act also amended the Outer Continental Shelf Lands Act to allow carbon storage on offshore federal leases, a carve-out spearheaded by Sen. Bill Cassidy (R-La.) and mirroring recommendations to Congress from the White House Council on Environmental Quality last year on how to grow carbon capture nationally.
The law orders the Interior Department to promulgate regulations for carbon storage within a year, which opens up a new era of offshore storage potential.
Lee Beck, international director for carbon capture at the Clean Air Task Force, said the United States lags behind other countries in developing a complete regulatory framework for permitting offshore storage.
“There’s so much onshore storage opportunity that … there hasn’t been this pressure so far,” she said.
Some are hoping the change opens the door for offshore storage lease sales, much like Interior regularly holds competitive lease auctions for oil and gas drilling rights.
McMullen, with Chevron, said the company was supportive of that approach, along with “reasonable standards for creditworthiness and operational experience for prospective operators.”
The Gulf court ruling has cast some uncertainty over Gulf leasing in the near term, although primarily around oil and gas. Exxon’s interest during the now-defunct lease sale in several shallow water leases was presumed to be part of the company’s carbon capture plans due to their high storage potential and poor oil and gas resource.
It’s yet to be seen whether the Biden administration will hold a new lease sale soon in which Exxon could rebid on potential storage areas. The administration has at least one more oil and gas lease sale in the Gulf scheduled this year but has been mum on whether it will move forward.
Even without the court decision, Exxon would have needed Interior’s blessing and a regulatory framework to use leases for storage.
Lars Herbst, recently retired Gulf regional director for the Bureau of Safety and Environmental Enforcement — a subagency of Interior that governs offshore safety regulations — said in a recent interview that agencies are already advancing a carbon storage approach, leaning on existing expertise for drilling wells, laying pipe and exploring the subsea.
“You have to look at the infrastructure that needs to go in, including the pipeline systems and surface facilities and injection wells that will be needed for that,” he said. “[The Bureau of Ocean Energy Management] will have to play an important part of that in identifying appropriate reservoirs that can be injected into.”
Researchers estimate those potential reservoirs are widespread, areas like saline aquifers, salt domes and underground hills, which have a natural dome shape to trap the CO2 as it tries to migrate upward.
Hansen said an estimated 40 gigatons of carbon dioxide could be stored in the Gulf in oil and gas fields and up to 250 gigatons in saline aquifers, a “tremendous” volume compared with the relatively minor carbon capture projects currently operating or proposed.
That sheer amount of storage capacity is one of the Gulf’s biggest selling points — and unlike onshore, where you would have to get several, dozens or hundreds of people together to agree on a project of scale, offshore there’s only Uncle Sam to barter with, experts said.
“[Offshore] does have the advantages of not being in someone’s backyard,” said Alex Breckel, the director of research at the Energy Futures Initiative, a nonprofit research think tank.
‘It’s a bit risky’
On social media, Exxon positions itself as a leader in carbon capture and describes the technology as “the emissions-fighting superhero you may have never heard of.”
“ExxonMobil is the first company to capture more than 120 million metric tons of CO2, through carbon capture and storage,” reads one infographic posted on the company’s Twitter. Exxon has long captured carbon dioxide from an onshore gas facility in Wyoming, piping it to older oil and gas fields where it can be used to stimulate production.
Carbon capture and storage is the emissions-fighting superhero you may have never heard of. What can it do? Let’s find out, in terms we can all understand. pic.twitter.com/ISqBKVcj4E
— ExxonMobil (@exxonmobil) January 6, 2022
Still, the proposal by the 14 companies is in the discussion phases, with Exxon acknowledging that “like most initiatives of this scale and magnitude, it will take time.”
“There is tremendous industry support for advancing carbon capture and storage in Houston,” said Spitler, the Exxon spokesperson. He declined to say whether Exxon was the leader of the proposal. The group has not put out a project cost estimate yet, a spokesperson for the companies said.
The group’s pitch closely resembles a hub concept floated by Exxon in April, in which emissions would be captured from petrochemical, manufacturing and electricity generation facilities and then “piped into natural geologic formations thousands of feet under the sea floor” (Energywire, April 20, 2021).
Generally, the concept of hubs involves shared pipeline infrastructure, with multiple carbon capture projects in one region feeding into a shared network (Energywire, Aug. 12, 2021).
But analysts said lauding the Houston project too early could prove hairy for Exxon and other companies involved.
“It’s a bit risky for the industry to be talking so much about something that is still very much theoretical at this point,” said Andrew Logan, senior director of oil and gas at the nonprofit group Ceres.
“It does run the risk of … creating the impression that this is more about public relations than it is about actually reducing emissions,” Logan also said, noting that the proposal is contingent on “a fairly favorable set of policy decisions” that might not happen.
Feit said the Gulf environment can be hard to monitor, adding: “Think about Deepwater Horizon.”
“When things go wrong, it’s hard to fix,” Feit said. He cited a study released last year from the Government Accountability Office that found weaknesses in pipeline integrity and oversight offshore, noting the potential irony of CO2 pipelines meant to carry captured carbon leaking it instead (Greenwire, June 7, 2021).
The oil giant has also been roasted by critics and environmental groups that point to Exxon’s investment in drilling versus reducing emissions. The company disclosed recently that it plans to spend $100 billion to $125 billion on capital projects over the next five years, versus just $15 billion during the same time span on emissions-reducing alternatives.
The company has also been criticized for focusing only on emissions from its own activities, when pollution from the oil and gas sector comes largely from the combustion of fossil fuels across the economy, from cars and airplanes to power plants and the industrial sector.
Patrick Drupp, deputy legislative director for the Sierra Club, said although carbon capture and storage might address some of a facility’s CO2 emissions, it does not address those downstream issues.
“[Carbon capture] may be necessary for last-mile decarbonization in a few very specific areas that do not have other alternatives, but we don’t … view it as a climate solution that should be deployed widely, especially in the power sector when there’s alternatives of transitioning to clean energy,” Drupp said.
Asked how Exxon would respond to criticism that carbon capture is being used to prolong continued oil development, a spokesperson argued that meeting climate targets is “virtually impossible without carbon capture and storage.”
“Carbon capture and storage is one of the few proven technologies that could enable some of the highest-emitting sectors to reduce their emissions, such as manufacturing, power generation and heavy industry, like the refining, petrochemical, electricity, steel and cement industries,” Spitler said.
Carbon capture and storage in the oil sector also has a chorus of defenders as world leaders pivot toward climate action and leading global oil producers face growing pressure to curb or offset their environmental and climate harms.
“[CCS] is absolutely a part of the climate solution,” said Julio Friedmann, a senior research scholar at Columbia University’s Center on Global Energy Policy who works in the carbon storage arena. In June, Friedmann co-authored a case study of net-zero industrial hubs in Houston.
“That’s what the Intergovernmental Panel on Climate Change says. That’s what the International Energy Agency says. That’s what the Biden administration says. That’s what the EPA says. That’s what the governments of Canada, the U.K. and the European Union say,” said Friedmann, who served as DOE’s principal deputy assistant secretary for the Office of Fossil Energy during the Obama administration.
Rep. Garret Graves (R-La.), a proponent of oil and gas development in the U.S. and a member of the conservative climate caucus, said critics of carbon storage don’t understand how energy systems work or how influential industry innovation has been in driving down greenhouse gas emissions to date, a nod to the rise of natural gas in the power sector, which slashed coal-for-power generation in the country, greatly driving down national carbon dioxide emissions.
Graves argued that energy demand is going to rise exponentially, natural gas demand globally is going to spike and renewable energy isn’t yet going to rise to the occasion.
“You get people to kind of stick their head in the sand with some degree,” Graves said. “[They] say, ‘Look we’re just gonna, you know, address everything by solar, wind, wave, hydro, thermal, whatever.’ But the reality is, is that you can’t do that fast enough with these numbers.”
The National Ocean Industries Association, a trade group that represents offshore energy industries, released a policy paper earlier this month that identified a list of policy recommendations aimed at turning the Gulf Coast into a “hub” for carbon capture (Energywire, Jan. 13).
NOIA President Erik Milito said the Gulf Coast could become a CCS hub “quickly” if the right policies are in place, adding that “further congressional action is urged to help enable offshore CCUS, including, among other things, the expansion and reform of the Section 45Q tax credit.” Many carbon capture supporters are pushing for amendments to the 45Q federal tax credit, which provides an incentive per metric ton of CO2 that is stored in saline formations or through enhanced oil recovery.
McMullen, the spokesperson for Chevron, also said the company was advocating for new and expanded financial incentives for carbon storage, as well as litigation limits “to reduce uncertainty” and streamlining of federal, state and local permitting.
Chevron has a target to store 25 million metric tons of carbon by 2030 and is searching for where to put it.
“As we focus on lowering the carbon intensity of our operations while enabling and scaling a commercial CCUS business, we recognize the U.S. Gulf Coast is uniquely positioned,” McMullen said in a statement.