Houston-based Occidental Petroleum Corp. (NYSE: OXY) and Canada-based Enbridge Inc. (NYSE: ENB) are considering a new partnership in South Texas, the firms announced Nov. 30.
Enbridge and Oxy's Low Carbon Ventures business signed a letter of intent to explore a potential joint venture aimed at developing a carbon pipeline transport system and sequestration facility near Corpus Christi.
"This collaboration will help accelerate the path to net zero not only for ourselves, but for other organizations who are exploring end-to-end solutions to capture, transport and permanently store CO2," said Jeff Alvarez, president and general manager of sequestration for Oxy Low Carbon Ventures.
Under a potential JV, Enbridge would construct and operate the CO2 pipeline system, while OLCV would construct and operate the CO2 sequestration facilities.
The transport and storage hub would provide services to CO2 emitters in the Corpus Christi region, which is home to a lot of energy and industrial activity. The hub would also serve some of Enbridge's proposed facilities in the area, like a low-carbon hydrogen production project at its massive Enbridge Ingleside Energy Center, the largest crude oil storage and export terminal in the U.S. Enbridge acquired Ingleside Energy Center from Houston-based Moda Midstream LLC in a $3 billion deal last year.
Enbridge and Denver-based Humble Midstream are teaming up to develop and market so-called "blue" hydrogen and ammonia from EIEC. The idea is to take natural gas off of Enbridge's Texas Eastern Pipeline system and convert some of that gas into hydrogen, Enbridge said in a statement. The CO2 created from producing hydrogen from natural gas would then be captured on-site and transported for storage.
"Although we do have sequestration capabilities and plan to expand those, Oxy provides significant subsurface expertise and complements our pipeline expertise nicely," Enbridge spokesperson Michael Barnes said. "We believe that our partnership brings more value to both parties in the Corpus area than both going it alone."
Oxy and Enbridge continue to evaluate technology options and the scope of opportunity for carbon capture and storage projects. More details will be determined as the project concept is developed, Enbridge said.
"This is a unique opportunity for two organizations to pair complementary skill sets in a way that decarbonizes our own facilities and provides a platform for our industrial neighbors who are also seeking to reduce their emissions," said Colin Gruending, president of liquid pipelines at Enbridge.
The core businesses for both companies still center around oil and gas. Oxy, one of Houston's largest publicly traded companies, is one of the largest producers of oil and gas in the U.S. Enbridge, headquartered in Calgary and with a large presence in Houston, is one of the largest pipeline and energy infrastructure providers in North America.
But both companies have worked to deepen their roots in the emerging low-carbon space.
Oxy and its subsidiary 1PointFive began construction on its first commercial-scale direct air capture plant in the Permian Basin during the third quarter. The $1.1 billion 1PointFive DAC project in Ector County, Texas, aims to capture up to 500,000 metric tons of atmospheric CO2 per year.
In October, Oxy announced entering into a lease agreement with King Ranch Inc. to support 30 DAC projects on 160,000 acres in Kleberg County. The Houston oil and gas company said it could develop upward of 100 DAC plants by 2035.
In addition to Enbridge's low-carbon hydrogen plans, the pipeline company sees growing opportunity in renewable energy. Enbridge recently acquired Dallas-based renewables developer Tri Global Energy, which has a development portfolio of 7 gigawatts of wind and solar capacity, in a $270 million deal.