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MarketScreener Homepage  >  Equities  >  Nyse  >  Exxon Mobil Corporation    XOM

EXXON MOBIL CORPORATION

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Carbon Capture Is Winning Fans Among Oil Giants

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02/12/2020 | 09:23am EST

By Rebecca Elliott

Can new technology suck carbon dioxide, a prevalent greenhouse gas, out of the air -- economically? More companies are betting that it can, as governments adopt ambitious carbon-emissions targets and investors grow increasingly concerned about the risks of climate change.

Carbon-capture techniques have existed for decades. But it's incredibly expensive -- not to mention energy intensive -- to remove the carbon dioxide from the atmosphere on a large enough scale to make a significant dent.

Now, Exxon Mobil Corp., Microsoft Corp. and others are focused on reducing the cost and the amount of energy required to capture carbon dioxide. Some companies are using giant fans to suck up air, then separating the carbon dioxide chemically. One venture plans to fill land in Arizona with dozens of accordionlike machines designed to expand as they absorb the gas.

Carbon-capture technology works similarly to plant photosynthesis in that it takes in carbon dioxide. But rather than producing oxygen or carbohydrates, as plants do, the equipment removes carbon dioxide from exhaust, ambient air or other gas streams, and then concentrates the molecule so that it can be stored underground, repurposed to make fuels or even used to carbonate drinks.

Among those leading the charge are major oil companies such as Occidental Petroleum Corp., Chevron Corp. and Exxon, whose fuels contribute to global warming. Carbon dioxide traps heat, and most domestic emissions of the gas come from burning fossil fuels, according to the Environmental Protection Agency.

Many oil producers are investing in capture technology because they have an economic purpose for the gas: They inject it deep underground to help release trapped oil. Known as enhanced oil recovery, this process is the top use for captured carbon dioxide globally, according to an analysis of large-scale carbon capture and storage facilities by the Global CCS Institute, a nonprofit that advocates for the technology.

Many companies expect there will be more reasons to buy and sell the molecule in the coming decades, though that likely will depend on lawmakers taking additional steps to regulate emissions, such as by putting a price on carbon.

"Part of this has to be economic," says Robert Peterson, a senior vice president for Houston-based Occidental, a leader in enhanced oil recovery.

Occidental gets nearly all of the carbon dioxide it injects underground from naturally occurring carbon-dioxide reservoirs. But in the future the company wants captured carbon to play a larger role so that it can take advantage of federal tax incentives, help meet corporate environmental targets and eventually market its fuels as low-carbon.

To do so, Occidental has joined with Canadian firm Carbon Engineering Ltd. to build a facility in the Permian Basin of Texas and New Mexico that would take up to roughly 1 million metric tons of carbon dioxide out of the atmosphere annually. That's equivalent to the greenhouse-gas emissions from more than 200,000 cars a year, according to EPA estimates.

Carbon Engineering plans to start construction next year and open the plant in 2023. It would be the world's largest facility designed to remove carbon dioxide from the ambient air, according to the Global CCS Institute, relying on industrial fans to bring air into contact with a liquid solution that binds to the greenhouse gas. Existing large capture plants suck up the gas where it's more concentrated, such as at natural-gas processing plants.

Carbon Engineering declined to provide a cost estimate for the facility.

Some find the practice of capturing carbon to augment oil production troubling. "We see at least a strong danger of a moral hazard here," says Jan Wurzbacher, chief executive of Swiss carbon-capture firm Climeworks AG, which doesn't sell its carbon dioxide to oil companies. "Will it just allow us to emit more fossil fuels?"

Climeworks clients include a Swiss greenhouse that uses the gas to help plants grow bigger; Coca-Cola HBC Switzerland, which uses the carbon dioxide to make seltzer; and even individuals who want to offset their carbon footprint by paying to bury the gas that Climeworks captures. At its facility in Hinwil, a village in Switzerland, fans suck air into containers roughly the size of small cars, where filters remove the carbon dioxide.

Carbon capture isn't cheap. If current technology were implemented at scale, it would cost between about $80 and $160 a metric ton to capture and store the carbon dioxide produced by natural-gas power plants, and between about $125 and $449 a metric ton to take the gas out of the ambient air, where it's more diffuse, according to Goldman Sachs estimates.

In the U.S. -- which generated roughly 5 billion metric tons of carbon dioxide in 2017, EPA data show -- the tax credit for capturing and storing carbon dioxide was less than $30 a metric ton as of 2019, though that is set to increase to as much as $50 in the coming years.

Globally, the highest price on carbon as of last year was about $121 a metric ton, in Sweden, according to the World Bank.

"Ultimately this is a waste-management problem," says Arizona State University engineering professor Klaus Lackner, who developed the accordionlike machine. "Any carbon-based fuel that you combust will produce CO2, and if you put that in the atmosphere, it becomes your responsibility to take it out."

Mr. Lackner calls his machines "mechanical trees" for their ability to filter carbon dioxide from the ambient air. One version of the device is about 5 feet wide and can expand to about 30 feet tall, exposing specialized disks that bind to carbon dioxide molecules. When the disks get wet, the carbon is released and can be collected.

Silicon Kingdom Holdings Ltd., an Irish company with ties to ASU, plans to commercialize the technology, and sell the carbon dioxide and potentially carbon credits or offsets, if those markets take off. It plans to install a dozen of the devices in the Phoenix area this year and eventually build a 360-unit farm in the state.

Powering carbon-capture equipment also typically consumes a lot of energy, potentially undercutting the climate benefits. Generally, researchers have assumed that for every 100 kilowatt-hours of electricity a power plant produces, an additional 25 kilowatt-hours are needed to collect the associated carbon dioxide emissions, according to Stanford University engineering professor Mark Jacobson. However, Mr. Jacobson's research indicates that figure can be as high as about 50 kilowatt-hours.

"There's really no case ever where carbon capture is better than just taking renewable energy and replacing a coal or gas plant," says Mr. Jacobson, who has studied the health and climate effects of carbon-dioxide removal.

Microsoft last month pledged to invest $1 billion over the next four years in the development of carbon-removal and reduction technology as part of a climate initiative that would have the technology company become "carbon negative" by 2030.

Exxon also is working to address some of those issues by joining with Connecticut-based FuelCell Energy Inc. to develop technology that would remove carbon dioxide from industrial exhaust electrochemically while also converting natural gas to electricity.

Chevron has invested in companies that are fine-tuning how to capture the greenhouse gas more efficiently. Among them are Carbon Engineering and Svante Inc., a Canadian firm whose filters extract the carbon dioxide produced from industrial processes such as burning natural gas or making cement.

Chevron also operates one of the world's largest projects to bury carbon dioxide, in Australia, which the government required Chevron to build as part of a natural-gas development there. In that case, however, Chevron isn't taking carbon dioxide out of the air. Instead, it separates the molecule from natural gas as it flows from underground.

"The demand for energy is growing, and the expectations to lower the carbon footprint are increasing," says Barbara Burger, president of Chevron's venture-capital arm.

More in The Future of Everything | Energy

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The Key to Keeping the Lights On: Artificial Intelligence

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A Sci-fi Author's Boldest Vision of Climate Change: Surviving It

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How a Utility's Counterintuitive Strategy Might Fuel a Greener Future

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Read the full report.

Write to Rebecca Elliott at rebecca.elliott@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
CHEVRON CORPORATION 0.57% 110.86 Delayed Quote.-8.52%
COCA-COLA HBC AG 0.95% 2861 Delayed Quote.10.49%
EXXON MOBIL CORPORATION 0.99% 60.47 Delayed Quote.-14.19%
GOLDMAN SACHS GROUP INC. 1.76% 237.32 Delayed Quote.1.43%
LONDON BRENT OIL 2.41% 59.02 Delayed Quote.-13.27%
MICROSOFT CORPORATION 0.29% 187.23 Delayed Quote.18.73%
OCCIDENTAL PETROLEUM CORPORATION 2.43% 42.55 Delayed Quote.0.95%
WASTE MANAGEMENT -0.64% 125.405 Delayed Quote.10.76%
WTI 2.17% 53.25 Delayed Quote.-16.22%
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