NAPE: Chevron’s Chris Powers Talks Traditional Oil, Gas Role in CCUS

Momentum is building for carbon capture, utilization and storage (CCUS) projects that wrangle CO2 from polluting point sources, and traditional oil and gas players are putting their subsurface, reservoir modeling and other expertise to use.

However, challenging economics are increasing reliance on policy support, innovation and partnerships to make such projects a reality. That was the message conveyed by Chevron New Energies CCUS Vice President Chris Powers, who shared a stage at the NAPE Summit in Houston with Cindy Yeilding, director for The Center for Houston’s Future.

“We are going to see more projects over time, but you’ve got to be cost disciplined. You’ve got to be efficient,” Powers said. “You got to be focused in picking the right projects and moving those projects forward thoughtfully, efficiently and effectively, so that we can show these projects can be done, can make a return, a reasonable return.”

The industry is in what he described as a “slow build.”

Data from the Global CCS Institute’s (GCCSI) Global Status of CCS 2023 report shows 198 new carbon capture and storage facilities were added to the project pipeline since the 2022 report. In 2023, 41 CCS facilities were operating, with 26 in construction and 325 in development.

Year-on-year growth of the combined capacity of CCS projects — either in the construction or development phase — has exceeded 50% since 2020, indicating CCS is starting to scale, according to the institute.

However, CCUS is not on track to meet the emissions target set in the International Energy Agency’s Net-Zero Emissions by 2050 Scenario, with deployments about one-third below the 1.2 gigatons of CO2 per year required to hit the target.

Chevron Corp. is among the companies that are moving forward with massive CCUS projects. Its Gorgon CCS system on Australia’s Barrow Island is the world’s largest, having injected more than 9 million tonnes of CO2 since the system started up in August 2019 though targets have been revised down.

“We’re growing our capabilities and learning every day—day in and day out—at Gorgon. And look, the realities are this is like the early days of the traditional business,” Powers said. “You’re learning and adapting as you go, as you get performance data from the operation, learn more about the reservoir. You’re going to continue to evolve and adapt and make the subsequent projects even better and better.”

‘Exploration mindset’

With partners Equinor and Talos Energy, Chevron is also developing an onshore-offshore CCS project along the Texas Gulf Coast. The project includes nearly 100,000 gross acres onshore in Chambers and Jefferson counties, Texas, and another 40,000 gross acres offshore Beaumont and Port Arthur, Texas. Its proximity near the Houston Ship Channel and Beaumont/Port Arthur area—major industrial corridors—will enable it help capture an estimated 100 million metric tonnes of CO2 per year.

Chevron is currently drilling the project’s first offshore stratigraphic well—known as delineation or appraisal wells—to further characterize the offshore acreage, Powers said. Cores will be taken and logs run to update reservoir models. The information will be used for ongoing technical modeling and permits, he said.

As a geologist with decades of experience working on deepwater Gulf of Mexico projects for BP, Yeilding said the industry is bringing an “exploration mindset” to CCUS. Given her background in exploration, Yeilding said she is accustomed to people doubting something will work. With “good science and excellent technology,” companies can overcome challenges, she said citing Direct air capture.

“It’s tough work right now. It’s very expensive. It’s very energy intensive. But as an explorer from an entrepreneurial family when I hear ‘This will never work’ or ‘It might work but it’s too expensive,’ I sense opportunity,” said Yeilding, who also serves on the board of CCS specialist and oil producer Denbury (now part of Exxon Mobil Corp.) “I think there’s a lot of romance to direct air capture. And I really applaud Oxy and other companies who are out there really, really trying to get the pilots going and head towards scale up.”

Policy, innovation

Incentives in the Inflation Reduction Act have been a plus for CCUS efforts, Powers and Yeilding said.

The law revises the requirements and qualification criteria for 45Q tax credits for carbon capture. It provides a tax credit (45Q) of $85 per ton for sequestering CO₂ produced by industrial activity, up from $50 per ton. It also adds a tax credit for direct air capture: $180 per ton.

In addition, the law lowers the amount of carbon emissions that projects must have to qualify and includes a direct pay option that further incentivizes investment.

While Powers called 45Q “a big step forward,” he pointed out the credit’s limitations. “There’s a time component. There’s also a fixed cap. If you really want to grow this industry, the reality is you’re going to need to make 45Q longer and at a higher tax credit in order to bring more emissions into the market. … The reality is [it’s a] low margin business. So, we’ve got to do everything we can to manage costs throughout the cycle.”

Getting Class VI well permit applications through the approval process is still a challenge, Yeilding said. “Even with …a few states having primacy, that’s a big challenge for us.”

Scaling the emerging industry requires building trust and a track record as well as a common, enforceable framework and monitoring and verification standards, she added.

Innovation is another critical need, especially when it comes to lowering capture costs—the biggest component of CCS projects. Some CO2 streams are easier than others to capture. It’s relatively easy and affordable to capture streams from amine processing plants, Powers said.

“Take the CO2 stream. You’re going to dehydrate it, compress it, move it … on a pipeline” to sequester underground, he said. However, the process becomes more difficult and more expensive with lower CO2 concentrations such as 3% to 4% CO2 in power generation operations. “It’s very cost prohibitive to capture those streams with the technology we have today. So that’s why you see many companies, ourselves and others, investing in technology.”

This includes partnerships across the entire CCUS supply chain and with startups.

“It goes back to policy, innovation and partnership. … If we continue to push forward in each of those areas,” Powers said. “We’re going to see some of these projects come to fruition and capture, I think, a big market out there.”

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