Midstream Business: The New Dawn of Carbon Capture

[Editor's note: A version of this story appears in the December 2021 issue of Oil and Gas Investor magazine.]

With ever-sharpening investors, shareholders and government focus on climate issues, oil and gas companies around the world are increasingly on the defensive to justify their businesses and adjust their operations to reduce carbon footprint and cut greenhouse gases. Some argue that instead of resisting this macroeconomic shift, oil and gas companies should modify their business model to capture the entire value chain by selling carbon fuel and capturing/storing waste carbon, merging “Big Oil” with “big sink.”

There is an array of green initiatives on the menu, including solar, wind, geothermal, battery and hydrogen. One area of decarbonization technologies, carbon capture, utilization and storage (CCS, or CCUS), is particularly suited for oil and gas operators due to their vast expertise in managing large and complex infrastructure, industrial gas treating, pipelines and reservoir management. It is an understated component critical to achieving net-zero emission goals. With governments beginning to price carbon and offer incentives or disincentives ranging from emissions credits, tradable certificates, carbon taxes, grants and penalties to encourage CCS development, a viable revenue model is taking shape, and a large addressable market is emerging.