By Sarah McFarlane
Oil companies have for decades made money by extracting carbon
from the ground. Now they are trying to make money putting it
Energy giants such as Exxon Mobil Corp. and Royal Dutch Shell
PLC are pushing carbon capture and storage -- where carbon is
gathered and buried underground -- as part of a drive to reduce
both their own and their customers' emissions. Executives say the
service could become a new source of income when the industry is
grappling with how to adapt to a lower-carbon economy.
Oil companies have long captured carbon from their operations,
albeit mostly to produce more oil. Now they want to retool that
skill as a service they can sell to heavy-polluting industries like
cement and steel, burying their carbon in the ground indefinitely
for a fee, rather than releasing it into the atmosphere. Yet
critics question the environmental benefits and high cost of such
Last month, Shell, Total SE and Equinor ASA launched a joint
venture to store carbon in a rock formation thousands of feet
beneath the seabed off the coast of Norway. The state-backed
Northern Lights project is set to be the first time companies
outside the oil industry will be able to pay to have their carbon
gathered and stored.
Exxon has said it plans to form a new business unit to
commercialize carbon capture and storage, forecasting it could
become a $2 trillion market by 2040. Chevron Corp. has formed
partnerships on storage projects, while BP PLC is codeveloping
storage projects in the U.K. and Australia.
Oil executives' sales pitch: We will provide your energy, then
take back the carbon to minimize your footprint.
Carbon capture and storage "is becoming a business rather than
just a solution," Maarten Wetselaar, director of integrated gas,
renewables and energy solutions at Shell, recently said, adding
that the company plans to include carbon storage as "part of an
integrated energy package" to energy customers.
Shell already captures and stores its own carbon at sites in
Australia and Canada, and says it wants to develop additional
commercial facilities, vastly expanding storage capacity for
The Norway project, set to start in 2024, already has waste
company Fortum Oslo Varme SA and HeidelbergCement AG as customers.
Shell says it has further interest from 10 other companies,
including Microsoft Corp. and ArcelorMittal, although no binding
contracts have been signed.
Shell and its partners haven't said how much carbon-capture
services will cost, or what the potential profits could be, saying
it depends on various factors including volumes.
Most carbon-storage projects rely on government funding. Norway
is covering about 80% of the $1.6 billion cost of the Northern
Lights project, with the rest split equally between Shell, Equinor
Deployed since the 1970s, most of the 26 sites operating carbon
capture today are focused on injecting carbon into wells to recover
more oil, with a handful dedicated to storing carbon, according to
the Global CCS Institute, a think tank that advocates use of the
Carbon capture typically works through the use of chemicals, to
which the carbon sticks, to filter out emissions from a source like
fumes at a power plant.
In the early 2000s, governments saw carbon capture as a way to
clean up electricity generated by fossil fuels, but the technology
was held back by high costs. Recent moves by governments and
companies to reduce emissions are rekindling interest in carbon
capture beyond the energy industry.
The U.S. offers companies a tax credit of as much as $50 a
metric ton of carbon captured, while the U.K., Norway and Australia
have collectively committed billions of dollars of funding for
A record 17 new carbon-capture projects were slated for
development last year, according to the Global CCS Institute. Many
are focused on hard-to-decarbonize sectors like steel and cement
making, where manufacturing processes release carbon dioxide.
"If [energy companies] can now make the transition from using
CCS for the oil and gas industry to selling it as a service to
their customers and decarbonizing their own product you scale it up
a lot more," said Irene Himona, an analyst at Société Générale.
Some researchers say the technology isn't the most efficient way
to reduce emissions. "Transitioning energy infrastructure away from
fossil fuels as well as planting trees and reducing deforestation
is a much better way to address carbon emissions," said Mark
Jacobson, professor of civil and environmental engineering at
Mr. Jacobson, who has long advocated for renewable energy, said
his 2019 analysis of a U.S. carbon-capture project found that it
didn't reduce overall emissions and that air pollution increased
because of the fuel required to power the technology.
Others worry the technology could be used by oil companies "to
pretend we can carry on doing what we're doing without actually
changing," said Kingsmill Bond, a strategist at London-based think
tank Carbon Tracker.
Oil executives say they expect the costs of carbon capture to
fall over time and that the technology is among a range of the
solutions for reducing emissions.
There are also concerns about whether storage sites could leak
carbon. In Europe, public resistance to land-based storage has led
to the use of aquifers and depleted gas fields in the North
In the Norway project, carbon will be transported by ship around
the bottom of the country before being pumped offshore via a
68-mile pipeline and then injected into an aquifer under the
BP is working on a similar concept for a project it will operate
in northeast England, where carbon will be collected from a
gas-power plant and various industrial sites, then stored under the
"We'll capture the carbon, we'll take it offshore, we'll stuff
it underground," BP Chief Executive Bernard Looney recently said of
the project. "Taking the carbon back is what I like to describe it
Write to Sarah McFarlane at firstname.lastname@example.org
(END) Dow Jones Newswires
April 19, 2021 05:44 ET (09:44 GMT)
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