A CCS Network Gets Its First Project

 

EnLink Natural Gas Mississippi River Pipeline Network and Facilities’ CO2 Emissions

 

 

 

 

 

 

 

 

 

Source: EnLink Midstream LLC

Key Points: The CF Industries/EnLink/ExxonMobil announcements earlier this month marks the EnLink network’s first firm CCS commitment and positions ExxonMobil to take CO2 from others in the region. The network is premised on better CCS economics from high-concentration sources, scale and retrofitting existing pipelines. IRA tax credits are a key enabler.

CF Industries/EnLink/ExxonMobil project to store 2 Million tonnes per year of CO2. Earlier this month CF signed an offtake agreement with ExxonMobil (XOM) for CO2 to be recovered at CF’s Donaldsonville, LA facility starting in 2025. The CO2 is to be taken along EnLink Midstream’s (ENLC) pipeline network to XOM-owned acreage (125,000 acres) in Vermilion Parish, LA where XOM will sequester it underground. With the CO2 capture, CF claims it will be first to market with up to 1.7 Million tonnes per year (mmtpy) of blue ammonia.

Broader agreement between XOM and ENLC for Carbon Capture and Storage (CCS) projects. Along with this announcement, XOM and ENLC entered into a Transportation Service Agreement. ENLC will deliver up to 3.2 mmtpy initially (beginning in 2025) and eventually up to 10 mmtpy of CO2 from the Mississippi River corridor to XOM’s Vermilion Parish acreage, using ENLC’s pipeline network (after retrofitting from current hydrocarbon service). The agreement seeks to leverage highly-concentrated sources of CO2 that can be more readily captured and then transported to a sequestration location — ENLC has noted that the Mississippi River corridor emits 80 mmtpy and has one of the highest concentrations of industrial CO2 emissions in the U.S. (see Exhibit). The company also cites 4,000 miles of existing pipeline in LA that can be used for CO2 transport.

This deal is just one part of XOM’s many CCS efforts. XOM has taken a leading role in various CCS initiatives globally, including in the formation of the Houston Ship Channel consortium, which now has 14 companies and seeks to store 50 Million tonnes of CO2 by 2030. We note that the ENLC deal comes as there is speculation that XOM is in talks to acquire Denbury Resources, which in addition to its hydrocarbon assets owns the largest dedicated CO2 pipeline network in the U.S., at ~1,300 miles spread across the Gulf Coast and Rockies.

ENLC has moved to bring others into the Mississippi River network. ENLC formed similar transportation agreements earlier in 2022 with Talos (Memorandum of Understanding signed in February) and Oxy Low Carbon Ventures (Letter of Intent signed in May) to transport CO2 to both companies’ acreage in LA. There have been no customer/off-take announcements for Talos or Oxy. ENLC also agreed with Honeywell to jointly market Honeywell’s CO2 capture technology offerings.

10/27/2022