Valero Energy Corp. and BlackRock Global Energy & Power Infrastructure Fund III said on March 16 that they are partnering with Navigator Energy Services to develop an industrial scale carbon capture pipeline system (CCS).
The initial phase is expected to span more than 1,200 miles of new carbon dioxide gathering and transportation pipelines across five Midwest states with the capability of permanently storing up to 5 million metric tonnes of carbon dioxide per year. Pending third party customer feedback, the system could be expanded to transport and sequester up to 8 million metric tonnes of carbon dioxide per year. Valero, the largest renewable fuels producer in North America, is expected to become an anchor shipper by securing a majority of the initial available system capacity.
“This project demonstrates our leadership in energy transition through innovation in renewables,” Joe Gorder, Valero chairman and CEO, said. “We continue to expand our long-term competitive advantage with investments to produce lower carbon fuels.”
Navigator is expected to lead the construction and operations of the system and anticipates operations to begin late 2024. In the coming months, Navigator will seek additional commitments to utilize the remaining capacity via a binding open season process.
The CCS project seeks to provide biorefineries and other industrial participants a long-term, economic path to materially reduce their carbon footprint while maximizing the value of their end-product in a cost-effective manner that is safe for the environment.
“Now is the time for industry-leading market participants to join forces to complete an environmentally focused midstream project of this size and scale. Harnessing our collective resources and strengths will create a unique infrastructure project that changes the way carbon emissions are managed,” Matt Vining, Navigator’s CEO, said.
Expect plenty of capital, plenty of volatility, plenty of shifts in investor strategies—and plenty of unfolding stories to track as the new year progresses.
‘One-of-a-kind’ deal diversifies partners’ interests.
Husky Energy said the potential sale is being undertaken independent of the outcome of the Calgary, Alberta-based company's proposed acquisition of rival MEG Energy.