Exxon’s $100 Billion Carbon Capture Plan: Big, Challenging And Needed

The momentum behind carbon capture, utilization and storage (CCUS) as a business opportunity with obvious synergies to the oil and gas industry continued to build this week, as ExxonMobil XOM rolled out an ambitious, $100 billion proposal for a massive carbon capture and storage program to be centered in Houston and offshore saline reservoirs in the Gulf of Mexico. Initial response to the plan from officials in Houston was positive, with both the Greater Houston Partnership and Democratic Mayor Sylvester Turner welcoming the environmental and economic opportunities present in a proposal that envisions a public/private partnership involving all levels of government.

ExxonMobil promotes the plan as one that would help Houston and the country achieve objectives related to the Paris Climate Agreement, as well as Houston’s commitment to achieve net-zero carbon emissions by 2050. Mayor Turner appeared to agree. "This proposal by ExxonMobil is the type of bold ambition and investment we will need to meet our climate goals and protect our communities from climate change,” he said on Tuesday. “ExxonMobil's proposal represents a significant step forward for the energy industry, and I hope it brings more companies to the table to help Houston lead a global energy transition."

It’s the kind of plan that only a company of ExxonMobil’s size, experience and internal expertise could hope to undertake. Joe Blommaert, President of ExxonMobil Low Carbon Solutions, in an interview Wednesday, told me that the company’s 30+ year experience in the CCUS realm, during which time it has accounted for 40% of all of the CO2 that has been captured by mankind, makes it uniquely situated to execute such a plan. “We do believe we have the necessary operating experience of running carbon capture,” he said. “We have the geo-science and other critical skills within our company, and we have the proven capability to execute very large projects and managing large capital investments. Those are the key capabilities that a company must be able to bring to bear here.”

I’ve noted previously that the Texas Gulf Coast appears to be a prime location for CCS projects, both in the Gulf, and utilizing numerous depleted oil reservoirs onshore. Guy Powell, Vice President of Planning and Business Development for the Low Carbon Solutions group told me, “The U.S. Gulf Coast endowment is incredible. The estimate of total available capacity is roughly 500 billion tons of storage capacity in the Gulf of Mexico, if you look at the region from New Orleans all the way down to Corpus Christi.” That’s enough capacity to accommodate hundreds of years’ worth of the plan’s goal of sequestering 100 million metric tons of CO2 per year once it is fully online.

So, ExxonMobil is targeting offshore storage in its plan. That certainly makes sense: It would obviously be far simpler planning around pore space ownership by just two entities - the Texas and federal governments - than dealing with the complexities involved in navigating through thousands of surface and mineral owners onshore.

Of course, putting the goals of a project of this scale into a context that is understandable to most of us is not an easy task. For example, 100 million tons of CO2 is roughly equivalent to the annual output of 20 million passenger cars. That’s basically the number of registered vehicles on the road across Texas today.

Exxon’s vision is to source that CO2 from the 50 largest industrial emitters in the Houston area, a plan that would go a long way to helping the city achieve its net-zero carbon goals. But even working in partnership with the city, state and federal governments, Exxon believes it is a plan that would of necessity involve many other industry participants besides itself. “We are well-positioned to take a leadership role in this area,” Powell told me. “But we also recognize that there will have to be a lot of other entities involved with making this happen.”

The plan would also require the creation of a regulatory framework at all of these levels of government in order to be successful. That itself presents a huge challenge, especially given that the Biden/Harris administration appears to have de-emphasized support for CCUS, at least in its initial proposal on infrastructure legislation.

Another big challenge will come from opposition from the green lobby, which seems to just knee-jerk in opposition to any proposal from the oil and gas sector. This opposition was exemplified a Politico story published within hours of Exxon’s announce earlier this week, under the headline “ExxonMobil’s climate pitch to Biden: A $100B carbon project that greens hate.”

Why does the green lobby “hate” this project? Good question. Apparently, according to Politico, it’s because it’s being proposed by “Big Oil,” an industry they’re actively trying to kill: “...environmental groups and many Democrats have slammed carbon capture proposals as a climate strategy, saying the only way to permanently reduce greenhouse gas pollution is a wholesale switch away from fossil fuels.”

Thus, any plan proposed by “Big Oil” that would have the effect of negating the industry’s emissions profile - and that of other industries, like power generation and chemicals - is to be automatically opposed on principle, even if the plan would create thousands of new jobs and hasten the reduction of atmospheric CO2.

The company firmly believes the world needs big, bold CCUS projects such as this one if it ever hopes to achieve its Paris Agreement goals. As Blommaert puts it, “This is not a question of ‘or’. Society needs all available solutions to meet the Paris goals. That is recognized by the International Energy Agency and the Intergovernmental Panel on Climate Change. This is particularly true for these hard-to-decarbonize sectors that have a lot of heat requirements, a lot of heat flow requirements. There is no technology readily available at scale that can decarbonize those activities, which are fundamental, and are manufacturing day-to-day products that society needs.”

That’s all true, but as we so often see in the public realm today, the prevailing narrative can overwhelm the facts on the ground. It’s a huge proposed project, and preventing the facts from being overwhelmed by that narrative will be a big challenge that the company must navigate in order to hope to get it done. But both Blommaert and Powell believe Exxon is up to that challenge.

As Powell put it, “It’s going to be a big undertaking, but that’s kind of what we do.”