The carbon capture plans lacking a place to put the CO2, suggested in the two connected stories linked here (link 1, link 2), echo something that we have been highlighting for a while. There have been several press releases with respect to CCS – partnerships – plans to accompany new investments – gathering schemes for the ethanol industry, etc. but none have any specificity around where they will put the CO2. The Houston team, discussed in a recent report is talking about offshore Texas, and given both ExxonMobil and Chevron in the partnership, we do not doubt that there is a plan, but in general, the permit activity at the EPA is, we understand, quite limited today. To apply for a class 6 permit, applicants need to have a detailed analysis of the sub-surface that they plan to target, and once you have identified a location, there are likely at least 18 months of work to get into shape to submit the permit. Some of the oil majors may be able to move faster on acreage that they already have seismic models for, but it is a long process – we wrote about the need for 45Q to change in both value and duration in our recent ESG and Climate Piece.
Source: Natural Gas Intelligence, October 2021
The exhibit above talk about the decarbonization of LNG. Decarbonizing LNG, though all of the routes shown will likely become an unavoidable cost of doing business, but could also secure a long future for LNG and natural gas, something that the world badly needs in our view if we are to get to net-zero without more very destructive inflation, either driven by runaway power costs or material and product shortages – some of which are evident today. Global buy-in to the message in the exhibit above would be a critical positive step for COP26.
