Chevron expands Gulf Coast carbon capture project capacity to 1 billion tonnes

Chevron Corp. is expanding the scope of its carbon capture and sequestration project on the Texas Gulf Coast after acquiring nearly 100,000 onshore acres.

The additional acres will increase the project's storage capacity to more than 1 billion tonnes of carbon dioxide, the company said March 6 during CERAWeek by S&P Global.

The Bayou Bend carbon capture and sequestration, or CCS, project now encompasses nearly 140,000 acres of onshore and offshore space for geologic CO2 sequestration, making it one of the largest carbon storage projects in the U.S. and one of the first in the U.S. Gulf of Mexico, the company said.

Talos Energy Inc. and Carbonvert Inc. developed the project to inject between 225 million tonnes and 275 million tonnes of CO2 from industrial sources along the U.S. Gulf Coast over a 25- to 30-year period. Chevron bought a 50% stake in the project in 2022, and Talos ceded its operator role to Chevron on March 1. Talos Energy and Carbonvert each retain a 25% stake.

The newly acquired acres are in Chambers County and Jefferson County, Texas. The original 40,000 acres of offshore shallow-water leases off the coast of Port Arthur were obtained through a 2021 Texas General Land Office auction.

The shallow waters of the U.S. Gulf could be ideal for CCS because of their natural underground storage capacity and proximity to the refining and petrochemical corridor along the Texas and Louisiana coasts. Exxon Mobil Corp. placed bids on nearly 100 leases in Texas' shallow waters for potential CCS projects.

"As a Southeast Texas native, I know how vital these industries are to our local communities and their economies," Chris Powers, vice president of Chevron's energy transition subsidiary Chevron New Energies International Pte. Ltd., said in a statement. "With this expansion, Bayou Bend is positioned to offer [CCS] solutions across a broad region of the Gulf Coast, from Houston to Orange and into western Louisiana."

Although Chevron has not announced a timeline for the project, the company said its tentative first phase of the project would sequester 4 million to 5 million tonnes per year of CO2, ultimately ramping up to double those targets. It is unclear how the new expansion changes its capacity targets.

"This expansion sets us up well to achieve Carbonvert's goal of sequestering 100 million tonnes before 2032," Carbonvert CEO Alex Tiller said in a statement.

Expanded tax credits in the federal Inflation Reduction Act could catalyze demand for captured carbon. The enhanced 45Q credits in the law increased carbon capture subsidies for CO2 captured and permanently stored from $50/tonne to $85/tonne and upped the subsidy for companies that utilize CO2 for other purposes, like enhanced oil recovery, from $35/tonne of CO2 to $60/tonne.

Within the next five years, costs for carbon capture additions are expected to reduce by 15%-30% as the second generation of projects in the pipeline benefit from improved efficiencies and other learnings from the first generation of carbon capture projects, according to the Energy Technology and Innovation practice at S&P Global Commodity Insights.

The twin forces of decreasing costs for CCS technology and increasing policy support could prompt more companies to make carbon capture investments, especially along the Gulf Coast, home to some of the largest emitters in the U.S.

Commodity Insights reporter Brandon Mulder writes for S&P Platts Dimensions Pro.