Denbury Announces CO2 Transport and Storage Agreement for Planned World-Scale Clean Hydrogen-Ammonia Complex
October 31 2022 - 4:15PM
Business Wire
Agreement covers 12 million metric tons per
year of CO2
Denbury Inc. (NYSE: DEN) (“Denbury” or the “Company”) today
announced that its subsidiary, Denbury Carbon Solutions, LLC. has
executed a CO2 Services Agreement with Clean Hydrogen Works (“Clean
Hydrogen”). Under the definitive agreement, Denbury will transport
and sequester CO2 captured from Clean Hydrogen’s planned
hydrogen-ammonia complex in Ascension Parish, Louisiana, which is
anticipated to be built less than two miles from Denbury’s existing
CO2 pipeline network.
The planned clean hydrogen-ammonia complex, Ascension Clean
Energy (“ACE”), is expected to include two world-scale ammonia
blocks with estimated ammonia production totaling 7.2 million tons
of ammonia per year. Approximately 75% of the planned ammonia
production volume is supported by letters of intent offtake
agreements with high-quality purchasers.
The proposed facilities are to be constructed on a 1,700-acre
site on the west bank of the Mississippi River in Donaldsonville,
Louisiana, an ideal location for exports. The two ammonia blocks
are currently projected to start up in a staged approach, with
Block 1 production anticipated to commence in 2027. A final
investment decision on the project is anticipated in 2024.
Key highlights of Denbury’s agreement with Clean Hydrogen
include:
- Denbury has the exclusive right to transport and sequester all
of the CO2 captured at ACE for a period of 12 years following
startup, with multiple extension options.
- Captured CO2 volumes are estimated to be approximately 12
million metric tons per year (“mmtpa”), comprised of 6 mmtpa from
each of the two ammonia blocks.
- Permanent, secure underground storage of the CO2 is anticipated
in one or more of Denbury’s sequestration sites located in close
proximity to Denbury’s CO2 pipeline infrastructure.
- Denbury has invested $10 million into the ACE project through
an investment in Clean Hydrogen and has committed to invest another
$10 million when certain project milestones are achieved.
With this agreement, the cumulative volumes of CO2
transportation and storage services agreements entered into by
Denbury total 20 mmtpa, double the Company’s cumulative goal to
reach 10 mmtpa by the end of 2022.
Chris Kendall, Denbury President and CEO, commented, “We are
excited to work with Clean Hydrogen Works and the State of
Louisiana on this important clean energy project that aligns with
our mission to sustainably deliver energy that the world needs. Our
existing CO2 pipeline infrastructure along the Gulf Coast, part of
the largest owned and operated CO2 network in the United States, is
perfectly situated to handle the CO2 emissions from this massive
project and to ensure that the carbon captured is safely
transported and secured in underground storage. We look forward to
creating significant value with our partners, for our shareholders,
and for the local and state economies of Louisiana.”
Mitch Silver, SVP and COO of Clean Hydrogen Works, stated, “We
look forward to working with industry leader Denbury to develop the
ACE Project, using innovation to meet global demand for clean and
affordable energy. Denbury’s track record for safely and
efficiently transporting and storing CO2 makes them an ideal
partner in this exciting endeavor to provide a cost-effective and
scalable pathway to decarbonize our use of energy.”
The ACE project is expected to generate up to 350 permanent and
1,500 peak construction jobs, benefitting the Louisiana economy. As
part of the planning process for the project, Denbury and Clean
Hydrogen have been meeting with local and state regulatory
officials and community stakeholders to provide an overview of the
economic and environmental benefits of the proposed facilities and
carbon capture and storage operations.
“Blue” ammonia results when the CO2 emissions that otherwise
would have been vented into the atmosphere during the process of
making ammonia are instead captured, transported and permanently
stored underground in secure geologic formations. Demand for “blue”
ammonia is anticipated to grow significantly as a decarbonized
energy source for hard-to-abate industries, both for its hydrogen
content and as a fuel itself, as it does not emit carbon when
combusted.
ABOUT DENBURY
Denbury is an independent energy company with operations and
assets focused on Carbon Capture, Use and Storage (CCUS) and
Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain
regions. For over two decades, the Company has maintained a unique
strategic focus on utilizing CO2 in its EOR operations and since
2012 has also been active in CCUS through the injection of captured
industrial-sourced CO2. The Company currently injects over four
million tons of captured industrial-sourced CO2 annually, with an
objective to fully offset its Scope 1, 2, and 3 CO2 emissions by
2030, primarily through increasing the amount of captured
industrial-sourced CO2 used in its operations. For more information
about Denbury, visit www.denbury.com.
The Denbury Carbon Solutions team was formed in January 2020 to
advance Denbury’s leadership in the anticipated high-growth CCUS
industry, leveraging Denbury’s unique capabilities and assets that
were developed over the last 20-plus years through its focus on CO2
EOR.
Follow Denbury on Twitter and LinkedIn.
ABOUT CLEAN HYDROGEN WORKS
Project majority shareholder, Clean Hydrogen Works (CHW), is a
sustainability-focused, commercially oriented project developer
with extensive experience in developing integrated energy value
chains. Established in early 2021, CHW is led by an experienced
team of project executives from leading global energy companies.
Developing integrated clean hydrogen-ammonia value chains optimized
for low-cost and low carbon, CHW is helping to meet the world’s
growing energy needs with a secure, affordable, and sustainable
energy supply at scale. Clean hydrogen and ammonia as a hydrogen
carrier will play critical roles in the global energy transition by
complementing renewables to decarbonize critical sectors including
marine, power, industrial, and heavy transport. For more
information, visit www.cleanhydrogenworks.com.
This press release contains forward looking statements that
involve risks and uncertainties, including the commitment of equity
and debt financing sufficient to construct one or both blocks of
the proposed facility, the facilities being constructed and
becoming operational; the nature and extent of the future market
for “blue” ammonia; the availability of anticipated quantities of
CO2 to be sequestered and the timing of same; Denbury’s successful
preparation and testing of storage sites for permanent CO2
sequestration; and obtaining Class VI permits required for
permanent CO2 sequestration. These statements are based on
engineering, geological, financial and operating assumptions that
Denbury believes are reasonable based on currently available
information; however, their achievement are subject to a wide range
of business risks, and there is no assurance that these goals and
projections can or will be met. Actual results may vary materially.
In addition, any forward-looking statements represent Denbury’s
estimates only as of today and should not be relied upon as
representing its estimates as of any future date. Denbury assumes
no obligation to update these forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20221031005765/en/
DENBURY IR CONTACTS: Brad Whitmarsh, 972.673.2020,
brad.whitmarsh@denbury.com Beth Bierhaus, 972.673.2554,
beth.bierhaus@denbury.com
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