Carbon capture technology is being rapidly developed by big oil companies to reduce emissions, but the obstacles are significant.

• The major oil and gas companies, including Chevron, Exxon, Baker Hughes, and SLB, are intensely competing to expand carbon capture and storage technology in the U.S. as the global community strives to achieve net-zero emissions by 2050.
• The technology today is expensive, logistically complex and faces controversy.
• The heavy industries like cement and steel, which currently have limited options to reduce emissions, are expected to be a significant market for carbon capture and storage technology, which the oil and gas industry is banking on.

A small Mississippi town could utilize a paper mill to test the effectiveness of capturing carbon dioxide emissions and storing it underground as a solution to combat climate change.

The Department of Energy selected the proposed project at 's mill in Vicksburg to receive up to $88 million in taxpayer funding in February. If successful, the system would capture and permanently store 120,000 tons of carbon dioxide annually, equivalent to 27,000 gas-powered cars, according to the companies behind the project.

The oilfield services giant formerly known as Schlumberger is collaborating with RTI International to design and engineer the carbon capture system, which sources containerboard from the mill for its boxes and packaging.

The Vicksburg paper mill project is one of the many initiatives receiving $12 billion in funding from the 2021 bipartisan infrastructure law to develop carbon capture technology across the US, as part of the Biden administration's goal to achieve net-zero emissions by 2050.

The cost, complexity, and controversy surrounding carbon capture and storage technology are significant barriers to its widespread adoption in the energy transition, particularly in communities where pipeline infrastructure would be expanded.

The International Energy Agency, based in Paris, has stated that carbon capture and storage are essential for achieving global net-zero emissions, while also cautioning the oil and gas industry against using the technology to maintain their reliance on fossil fuels. Some climate activists argue that the industry is merely investing in carbon capture as a means to prolong the usage of oil and gas.

Industrial plants typically capture carbon dioxide emissions using chemical absorption technology, condense them into a fluid for transport, and store them thousands of feet underground in depleted oil wells or geological formations such as saltwater reservoirs.

The task of capturing more than 1 billion metric tons of carbon dioxide annually by 2030, which is more than 20 times the 45 million metric tons captured in 2022, is a daunting challenge, as per the IEA. Similarly, by 2050, the amount of carbon that needs to be captured should reach 6 billion tons, which is more than 130 times the 2022 level, according to the agency.

The carbon capture and storage industry has a poor track record, with only 5% of announced projects reaching a final investment decision, according to the IEA. The industry must prove that the technology can operate economically at scale after struggling to deploy it for years, the agency emphasizes.

The Vicksburg papermill project is still in its early stages of development. SLB is confident that it will be technologically viable, said Fred Majkut, senior vice president of carbon solutions at the company. The objective is to demonstrate that carbon capture and storage is also economically viable, Majkut added.

The challenge of making carbon capture and sequestration economically viable lies in the high cost of building plants that capture carbon dioxide, which can range from hundreds of millions to billions of dollars, according to the executive.

The Vicksburg project for International Paper presents a chance to create eco-friendly products for environmentally conscious consumers and generate revenue through the sale of carbon credits.

International Paper's director of low carbon innovation, Adam Miklos, stated that customers can economically express their preferences in the marketplace by clicking a button to reduce carbon emissions for an Uber or airplane trip.

If successful, it could reduce emissions and provide an opportunity to sell carbon and renewable credits, according to Miklos.

Decarbonizing heavy industry

The Mississippi mill serves as a testament to the oil and gas industry's efforts to prove the effectiveness of carbon capture and storage as a means of reducing emissions, having utilized the technology for decades to extract oil.

Since the 1970s, carbon storage techniques have been employed in enhanced oil recovery, where carbon dioxide is injected underground to increase pressure and push more crude towards production wells.

Carbon capture and storage is being repurposed by companies such as , , and others, with the hope that it will serve a large market of heavy industries like cement and steel, which currently have limited options to reduce their emissions.

If all announced projects come to fruition, the global spending on carbon capture and storage projects is predicted to reach $241 billion by 2030, with the US and UK leading the way with expected investments of $85 billion and $45 billion, respectively, by the end of the decade, according to Rystad Energy.

The Clean Investment Monitor reports that in the U.S., investment in carbon management technologies more than doubled to $1.2 billion in 2023, the first full year after the Inflation Reduction Act was passed. The law supports the industry with tax credits of up to $85 per ton of emissions captured and stored.

The cement industry emits carbon dioxide not only from burning fossil fuels but also from the chemical reactions that occur during the manufacturing process, with about two-thirds of emissions coming from breaking down limestone.

Cement is the second most widely-used product globally, after drinking water, and accounts for approximately 7% of the world's carbon dioxide emissions, according to the United Nations. When combined with steel, these two products represent about 14% of global emissions, as stated by the U.N.

"According to Majkut, these industries cannot effectively reduce their carbon emissions to zero without carbon capture technology. The production of cement will always result in CO2 emissions due to the materials used."

SLB is attempting to address the challenge of scaling up carbon capture technology by focusing on the capture process, which is one of the major obstacles due to its high cost. Majkut explains that the solvent that will be used at the Mississippi mill to capture carbon dioxide molecules will reduce the energy requirements of the process and make it more cost-effective.

Majkut stated that in the next 12 to 24 months, we will introduce that chemistry as a core offering and develop process design packages.

Olivier Le Peuch, CEO of SLB, has stated that carbon capture and storage will be a crucial component in achieving the company's revenue goals of $3 billion by 2030 and $10 billion by 2040 for its new energy portfolio.

Aker Carbon Capture, a Norwegian pure-play carbon capture company, received a nearly $400 million investment from SLB this month to speed up the deployment of the technology at a commercial scale.

In 2022, Baker Hughes acquired Mosaic Materials and is now developing direct air capture technology. The value of the deal has not been disclosed.

The technology is expected to capture low concentration carbon dioxide emissions from both the atmosphere and industrial plants by the end of 2026, according to Baker Hughes.

By 2030, Baker Hughes aims to secure up to $7 billion in orders for its new energy portfolio, which encompasses carbon capture and storage technology. The company anticipates a total market value of between $60 billion and $70 billion for its new energy business by the end of the decade.

According to Alessandro Bresciani, senior vice president of climate technologies at Baker Hughes, by 2030, we can expect these technologies to become reasonably competitive.

Chevron, Exxon building Gulf Coast hubs

The Gulf Coast, with its numerous industrial plants, is becoming a hub for carbon capture and storage investments in the U.S.

Chevron's vice president of low carbon energies, Jeff Gustavson, stated that the region has the potential to rapidly increase the use of technology due to its favorable geology for storage, which is located near high concentration emissions that can be captured at a lower cost. Gustavson added that approximately 100 million tons of carbon dioxide are emitted annually from Houston to Port Arthur, Texas.

The Gulf Coast is the focus of $10 billion and more than $20 billion in spending on emissions-reducing technologies, including carbon capture and storage, in major projects under development.

Exxon has recently entered agreements with ammonia and fertilizer producers in Louisiana, steelmakers in Louisiana, and an industrial gas producer in Beaumont, Texas to capture carbon emissions. The company aims to start a carbon capture and storage system at CF Industries in the first half of 2025.

According to Dan Ammann, president of low carbon solutions at Exxon, the three contracts signed promise to eliminate 5 million tons of emissions yearly, which is equivalent to replacing 2 million gas-powered cars with electric vehicles.

In late 2023, Exxon completed its acquisition of Denbury, a carbon-dioxide pipeline operator, for $5 billion. This acquisition granted Exxon over 900 miles of pipeline that run through Mississippi, Louisiana, and Texas, and are situated near at least 10 storage sites in the region.

"The Denbury acquisition provides us with instantaneous scale and reach across a vast source of emissions along the Gulf Coast, allowing us to develop storage along the pipeline, Ammann stated."

Exxon has the largest carbon dioxide pipeline network in the U.S., and there is a high level of interest from various emitters along the Gulf Coast, according to Ammann.

Bayou Bend, a 140,000 acre permanent carbon dioxide storage space project, is a joint venture between Chevron, the operator and lead investor, and minority shareholders and Carbonvert.

Currently, negotiations are being held with potential customers, but Gustavson refused to reveal their names. The region is known for its petrochemical, refinery, liquid natural gas, and industrial gas operations, which all contribute to a substantial carbon footprint.

Bayou Bend could become one of the largest CO2 storage projects globally, with the potential for even more storage capacity if technical advancements are made, according to Gustavson.

The IEA considers carbon capture and storage crucial for reducing emissions in heavy industry sectors. However, Fatih Birol, the agency director, stated in November that the oil and gas industry should abandon the belief that capturing large amounts of carbon is a viable solution to climate change.

The IEA report urged the industry to invest more in clean energy and acknowledged that a successful energy transition would require reducing fossil fuel production, which led to criticism from OPEC, who accused the IEA of attacking the oil and gas industry.

"According to SLB's Majkut, carbon capture should not be implemented everywhere. Instead, the primary way to decarbonize is through energy efficiency, scaling up of renewables, and carbon capture should be used on applications that cannot be easily electrified or decarbonized otherwise."

Pipeline opposition

To achieve net-zero emissions in the U.S., a significant expansion of carbon capture and storage infrastructure is necessary. The Department of Energy estimates that the carbon dioxide pipeline network needs to increase from its current 5,200 miles to between 30,000 and 90,000 miles.

""The proximity of the right geology to concentrated emissions is crucial for rapid scaling, but over time, we will need to develop more CO2 infrastructure to transport CO2 over longer distances for the same storage," Gustavson stated."

The approval process for pipelines is challenging due to the need for lengthy approval from multiple jurisdictions, which can create bottlenecks, according to Majkut.

The safety concerns of residents in communities where pipelines transport carbon dioxide have led to opposition to pipeline expansion. In 2020, a pipeline owned by Denbury ruptured near Satartia, Mississippi, resulting in the release of over 31,000 barrels of carbon dioxide. This incident led to the hospitalization of more than 40 people and the evacuation of over 200 individuals from the area. As a result, Denbury was fined nearly $2.9 million by the U.S. Transportation Department.

In a 2022 report, Denbury stated that it had enhanced its equipment and protocols following the pipeline leak to significantly minimize the likelihood of future occurrences and lessen their impact if they do happen.

The Energy Department claims that carbon dioxide pipelines have a superior safety record compared to natural gas pipelines and other significant infrastructure, such as electric transmission. Over the past two decades, there have been no fatalities associated with carbon dioxide pipelines, and only one injury, in addition to the hospitalizations from the Satartia incident, according to the Transportation Department.

Miklos, an executive at International Paper, stated that there are still many uncertainties regarding carbon capture and storage. However, the Vicksburg project presents an opportunity to closely examine the technical, economic, and environmental implications over a prolonged period.

He stated that the main concerns revolve around performing this task in a cost-effective manner.