NEW YORK—While meeting today’s energy growing demand, Chevron Corp. is taking steps to progress its low-carbon ambitions centered on offsets, nature-based solutions hydrogen and carbon capture, utilization and storage (CCUS).
Its latest moves included completing in June its acquisition of Renewable Energy Group, expanding its renewable fuels business; partnering with Walmart to supply renewable natural gas for a demonstration of Cummins Inc.’s new 15-liter natural gas engine for heavy-duty trucks; and partnering with Kazakhstan’s Kazmunaygas to look into the potential of CCUS, energy efficiency, hydrogen and methane management.
“Our ambition is that we will have CCS projects beyond Gorgon and Quest in operation by . ... It’s not a short process. But we’re getting going now. We’ve got a keen focus on getting early successes and beginning to move the ball down the field. I’m optimistic that by the turn of the decade, you’re going to have projects in operation beginning to move toward hub scale.”—Chris Powers, Vice President, Carbon Capture, Utilization and Storage, Chevron New Energies
The partnerships, just a couple of many the California-based company has forged, comes as companies aim to combat climate change by reducing emissions and utilizing cleaner sources of energy. Chevron said it has identified nearly 100 projects to reduce carbon intensity and plans to spend about $2 billion on such greenhouse-gas abatement projects through 2028, cutting emissions by 4 million tonnes.
Chris Powers, vice president for CCUS with Chevron New Energies, sat down recently with Hart Energy on the sidelines of Reuters’ Global Energy Transition Conference to speak about collaboration and two emerging areas getting the industry’s attention: CCUS and hydrogen. Editor’s note: Questions and answers have been edited for clarity and brevity.
Hart Energy: How crucial are collaboration and partnerships both within and outside the energy industry in helping Chevron reach its net-zero ambitions?
Chris Powers: Leverage is a lot of what we’ve done in the past in the energy business, but it’s new and different. Our view is that it’s going to take policy, innovation and partnership or collaboration. Between the new technologies, scale of projects, investments and the groups of people you need working together to make meaningful progress, partnerships are going to be absolutely key. For us, there are two buckets. There are partnerships with traditional large players; you might see us [partner with] another major on an investment. There’s also unique capabilities and skill sets that different companies bring to the table. An example is a partnership with a capture technology provider. That may be a skill set or capability that they have, and you combine that with somebody that has sequestration capability, somebody with an interest in transportation and if you can bring those altogether, that’s likely to lead to an efficient and effective solution.
HE: Chevron recently became a nonoperating partner in the Bayou Bend CCS project with Talos Energy. What made that project appealing to Chevron?
CP: The unique thing about Bayou Bend is we have the first dedicated CO₂ sequestration lease offshore in the U.S. in Texas state waters governed through the Texas General Land Office. The Bayou Bend lease has great geology; it’s not near any significant legacy shelf oil and gas field. We’re confident in the rocks. We’re confident in the pore volume that’s there, and it’s so close to a number of industrial emitters, the Golden Triangle, as well as Houston. So, it ticked all the right boxes. As a nod to the partnership piece, we’ve got a longstanding relationship with Talos through deepwater developments. When you combine all that—the geology, the partners involve/the relationship with Talos and then we learned about Carbonvert, it just all came together and it was a great opportunity for us.
HE: Does Chevron have any interest in similar projects where you become the operating partner in North America?
CP: Absolutely. An example of an operating project would be our Eastridge project in the San Joaquin Valley Basin in California. It’ll be a staged project. The first target will be a cogeneration unit that we have on our existing operations. We’ve got the surface and the minerals, so it’s something very much in our control. We’re going to design, build and operate that project, and we’ll continue to see a mix of operated and nonoperated ventures as we move forward.
HE: Chevron has a major CCS project in Australia, one of the world’s largest, at Gorgon. What lessons have Chevron learned from projects like Gorgon that can be applied at future CCS projects?
CP: Each reservoir is unique. There’s proven technology and then there’s new generation technology. The capture technology—the dehydration, the injection—works very well. One of the things that I think we’re all going to learn on these projects is on the injection piece and the reservoir management. Each targeted formation is a little bit different. Some of them are depleted oil and gas fields. Some of them are saline aquifers. For these saline aquifers, depending on the extent and where the geology ultimately flows to, you may have to do pressure management between different zones. So, the key is not so much the specific lessons learned but to have the learning culture. Say, OK, ‘As we’re progressing this, we’re learning bits and pieces. This is a learning around pressure balancing between zones. This is a learning around sand injectivity.’ So, to have that culture where people are comfortable identifying the lessons learned and then sharing those broadly not only within our company but more broadly across the industry so that we can all get better at this collectively.
HE: What steps can be taken to help lower the overall cost of CCS projects?
CP: Right now the market is policy enabled. We’ve got 45Q and other incentives. It’s a little bit different in other regions. So, you’ve sort of got, call it, a revenue or a tax credit side, but then you’ve got the cost side and the cost to capture is very high right now. Depending on the application, it could be 70% or 80% of the cost of an integrated project. We think targeted investments to help drive down the cost to capture will be one of the key enablers to making this work at scale. There’s also stuff like shared pipeline infrastructure and things like that. But reducing the cost to capture is going to be critical. And that’s one of the reasons we’re making targeted investments through both Chevron New Energies and Chevron Technology Ventures at these early generation capture technology companies.
HE: Is this where technology comes into play?
CP: We’ve been developing technologies within Chevron for 100 years. We’ve got isodewaxing catalysts, base oils, special alkylation technology. We’ve been doing this from test tubes up to full scale units for decades and decades and decades. But it’s the wrong approach to assume you’ve got all your answers. That’s why we are very comfortable going out. We have an honest, continuous screening process where we’ll look at these early phase green tech companies and say ‘That’s interesting. That’s worth a seed investment.’ We’ll make a couple million-dollar investment here and see how things progress. As the companies develop, we’re willing to make larger investments and say, ‘Hey, these guys could be a game changer and could really make a difference in the market.’ It’s two things for us. We make seed investments because we want to learn and we want to help these companies get out of the test tube phase. On the growth capital side, we want to invest not only because we believe in the company, but also because we want to enable the market. It’s great if we use the technology of a company like Carbon Clean, which we invested in, on our own assets. It’s also equally great if they go out and sell units to cement or to steel or anybody else, because it’s helping to address the climate challenge we have in front of us.
HE: What role is hydrogen playing in Chevron's new energy strategy?
CP: Hydrogen is one of our four key verticals, and there are hydrogen opportunities. They may be smaller in earlier days, but ... near-term horizon several years down the road, there’s going to be a lot of hydrogen opportunities. We’re color agnostic in general. Blue hydrogen makes a lot of sense in a lot of jurisdictions coupled with CCS. You can take a relatively lower-priced hydrocarbon feedstock, capture the CO₂, and then you’ve got a nice low-carbon intensity hydrogen stream. In other areas, especially as you look several years down the road as cost comes down, green hydrogen is going to make a lot of sense in areas where you’ve got abundant renewables.
HE: What do you believe is needed to help scale hydrogen here in the U.S.?
CP: I'll broaden this to blue products—hydrogen, ammonia. It’s a little bit early days. That’s maybe why you see more tangible focus on CCS right now. The technology’s there. We can go apply it. On the blue products side, you’re going to put very large investments in hydrogen plants, ammonia plants and capture equipment. So, you need to have anchor offtakers of the product. There are multiple pieces of the value chain to put together. You’ve got to have pore space to put the CO₂. You’ve got to have a source of fuel, good supply, relatively low cost. For instance, gas coming from the Permian or Appalachia. You’ve got to have an offtaker in a market to go to. It’s really about lining those three bits up; that’ll underpin FID on a big project at scale. We as well as others are doing a lot of work to move some of those projects forward.
HE: How do you think that market will look in 2030 for both hydrogen and CCS?
CP: I can speak within our portfolio. Our ambition is that we will have CCS projects beyond Gorgon and Quest in operation by that time. If you look at the timeline, it takes a number of years to move these projects forward. On a CCS project in particular, you’ve got initial geologic screening work that’s got to be done. You’ve got to do pre-feed, engineering, feed engineering. You’ve got to get a Class VI permit from the EPA or a couple of the states that have primacy. That can be a multiyear process right now. Then, you’ve got to construct it and get it in operation. So, it’s not a short process. But we’re getting going now. We’ve got a keen focus on getting early successes and beginning to move the ball down the field. I’m optimistic that by the turn of the decade, you’re going to have projects in operation beginning to move toward hub scale. On the hydrogen side, I think you’ll be beginning to see more and more investment as that piece of the value of the energy value chain grows as well.
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