The Louisiana carbon hub project planned by firm Gulf Coast Sequestration could be the first step toward a carbon market that could help ease the emissions headaches of an intensely industrialized region, the LSU Center for Energy Studies said in a new report.
The Louisiana company’s carbon capture and sequestration (CCS) project has the potential to store about 300 million metric tons (MMmt) of CO2 over its 30-year lifetime, Gulf Coast Sequestration (GCS) projects. Its target market is large industrial facilities in the region seeking to reduce carbon emissions.
And there are plenty of those facilities in the neighborhood. The LSU report estimates that a 100-mile radius around the planned hub is home to refining, chemical manufacturing and LNG export operations employing about 51,000 workers.
“From our perspective, there is a very large, addressable market within 50 miles.” Benjamin Heard, principal, Gulf Coast Sequestration
“One of the things that we find to be an advantage to our facility is the fact that we are in such close proximity to high volumes of emissions,” Benjamin Heard, principal at Gulf Coast Sequestration, told Hart Energy. “From our perspective, there is a very large, addressable market within 50 miles.”
The report uses the GCS project as an example of the region’s potential to take the lead in CCS because of its abundance of underground space for CO2 storage.
“Given the role that oil and natural gas play in the regional economy and the trend towards decarbonization, the opportunity to undertake geologic sequestration of CO2 has the potential to be a critical opportunity to support industrial activity,” the report said.
The Texas-Louisiana region’s coastal economy is heavily oriented to oil and gas, but that dependence comes at a price: Texas emits more greenhouse gases than any other state—702 MMmt in 2018, according to the Environmental Protection Agency (EPA). Louisiana, though No. 5 in that ranking, emits far more on a per capita basis.
Since the start of the shale revolution in 2008, U.S. emissions of greenhouse gases have trended down as natural gas replaced coal as a fuel for electricity generation. On the Gulf Coast, however, emissions rose along with a substantial increase in industrial production.
Louisiana, in particular, diverges from national trends. While industry accounts for 22% of greenhouse gas emissions in the U.S. as a whole, the share in Louisiana is about 61%. Power generation is responsible for 27% of U.S. emissions, but only 13% in the state due to its heavy reliance on gas and nuclear for electricity.
As a result, the only way to significantly reduce emissions in the region is to address its biggest source: the chemical and refining sectors. Not doing so would buck global trends toward decarbonization and put the region’s economy at risk, the report said.
On the verge
GCS is on the verge of breaking ground on a facility to take advantage of the vast underground reservoirs on the Louisiana coast. The company has filed applications for Class VI Underground Injection Control permits from the EPA for Phases I and II of the project, and Heard said GCS continues to make progress with the agency on obtaining approvals.
Phase I is anticipated to begin operations in 2025 and is designed to sequester 2.7 MMmt of CO2 per year. Phase II, scheduled to start operations in 2026, will have capacity of 1.3 MMmt a year. Phase III, planned to start in 2027, is designed to be able to sequester 6 MMmt per year. The facility is expected to sequester about 300 MMmt of CO2 into subsurface caverns.
Construction of Phase I will take about 12 months to 18 months, including the process of providing updates to the EPA. GCS has secured a memorandum of understanding with direct air capture leader Climeworks and is in talks with prospective customers, but not ready to make announcements yet.
There is a relative scarcity of CCS projects in operation, compared to carbon capture, utilization and storage (CCUS) facilities, many of which are geared to injecting CO2 back into the ground for enhanced oil recovery (EOR). There are more than 5,000 miles of CO2 pipelines in the U.S. that transport the greenhouse gas to oilfields for EOR.
The 12 operating CCS projects in the U.S. store about 16.8 metric tonnes per annum (mtpa), the report said, with about 19 others in development. More than $6 billion was included in the 2020 Energy Act for CCS research. The 2022 Inflation Reduction Act provides tax credits of $60 to $85 for each ton of CO2 sequestered for facilities that qualify.
Heard also pointed to the Bipartisan Infrastructure Law, passed in 2021, as a key provider of federal grants to build carbon capture facilities.
“All of that is certainly quite constructive, both for our project specifically, as well as the space,” he said.
At stake is the economic well-being of the Gulf Coast region. Over the past decade, the region has supported more than $180 billion in energy manufacturing investment, the report said. And the region’s significant role in the domestic and international energy trade puts it in a unique position as the world moves toward decarbonization.
CCS is a particularly valuable tool, the report said, because the plants can begin tackling the emissions problem over the short term, before cleaner fuels like hydrogen can be scaled up.
“Neither Louisiana nor coastal Texas wants to see these important energy manufacturing sectors lose their economic competitiveness due to an inability to react to changing climate policies, rules and regulations,” according to the report.
Exclusive: FireBird Energy Prowling Permian for Midland Basin M&A
2023-05-15 - After selling FireBird Energy LLC to Diamondback last year, the same team is searching for deals to develop another asset in the Midland, and possibly the Delaware Basin, too.
Matador Resources Prioritizes Reducing Debt After $1.6B Acquisition
2023-04-27 - Matador expects a boost in production from its $1.6 billion Permian Basin acquisition and touts new “horseshoe” wells as first-quarter results came in above expectations
Brazos Midstream Bets on the Permian’s Prowess
2023-04-19 - Brazos Midstream leadership reckons there will come a time where entering the public sphere makes sense, but for now, Brazos’ strategy reaps the rewards of private perspective.
High Demand Equals Higher Midstream Q1 Earnings
2023-05-17 - Midstream is focused on buying, building and growing in all ways, but in the meantime, first-quarter earnings are good.
Sitio Royalties Hits Unusual M&A Wall in Q1
2023-05-11 - The first quarter was the first time in over two years that Sitio Royalties hasn’t announced or closed a new acquisition, and it wasn’t for a lack of looking.