Exxon Mobil Ramps Up $400MM CCS Project in Wyoming

Exxon Mobil Corp.’s $400 million carbon capture and storage (CCS) expansion project in LaBarge, Wyoming, is progressing toward startup in early 2025, a move expected to reduce the company’s net greenhouse gas emissions.

“The new well will start up February next year,” Kathleen Ash, CEO of Exxon Mobil-owned Denbury Inc., said this week during an energy summit co-hosted by Rice University’s Baker Institute for Public Policy and the Baker Botts law firm in Houston. “It was fully funded. …Construction has been pretty impressive.”

CCS is considered a must when it comes to bringing down emissions as the world’s energy needs grows. Companies with the technical knowhow and capital, backed by regulatory support and communities’ blessings, are moving forward with such projects.

Exxon’s LaBarge expansion project will add up to about 1.2 million tonnes per annum (mtpa) of CO₂ per year of capture capacity to the facility’s existing 6 mtpa to 7 mtpa capacity.

The company’s proposal to sequester carbon deep underground in Wyoming’s Lincoln and Sweetwater counties was approved by the U.S. Bureau of Land Management in 2022. The expansion project includes modifying the existing gas treatment facility to increase capture capacity and installing pipeline to transport CO₂ to the reservoir where it will be stored.

Located at the Shute Creek Treating Facility, Exxon’s LaBarge opened in the 1980s and is one of the world’s largest carbon capture facilities. It is also the largest U.S. producer of helium, which is made with natural gas from Exxon’s LaBarge Field. Shute Creek processes CO₂-rich natural gas from the LaBarge Field.

Ash said she sees CCS as the most scalable technology in the low-carbon space today.

“It’s a proven technology. This isn’t something that’s blue sky that you have to have break through today,” Ash said. “Direct air capture could be very helpful, [but] it’s very expensive today.” Looking at the cost curve, she added that CCS technologies are available today and can be implemented at scale from an injection standpoint.

However, technology breakthroughs are still needed to lower the cost of capture carbon, she added. “I think that’s where we are kind of early days on the capture side is trying to get that cost down.”

Capture costs differ based on factors such as the concentration or purity of CO₂ being captured. On average, capture costs account for about three-quarters of the total per ton cost of CCS projects, according to a report from the Congressional Budget Office.

Incentives are being offered, however, to improve project economics. These include the 45Q federal tax credit, created in 2008 and updated in the Inflation Reduction Act with sweetened incentives.

The 45Q tax credit offers $17/mt for sequestered, qualified CO₂. The amount jumps to $60 per ton for storage associated with enhanced oil recovery (EOR); $85 per ton for dedicated geologic storage; $130 per ton for direct air capture with carbon utilization; and up to $180 per ton for direct air capture with carbon storage.

Exxon Mobil, which is developing several CCS projects, has a current capture capacity of 9 MMmt/year, according to its website. The company grew its CCS business, including its CO₂ pipeline network, in 2023 with its $4.9 billion acquisition of Denbury.

Texas-based Exxon has said it is pursuing more than $20 billion in lower carbon opportunities through 2027. Besides CCS, these include hydrogen, lithium and biofuels. About half of the planned investment is going toward Exxon’s Low Carbon Solutions business and abatement projects, while the rest aims to help its customers lower greenhouse gas emissions.