As the oil and gas industry faces growing scrutiny over emissions, one opportunity stands out: Carbon Capture, Utilization, and Storage (CCUS). For companies aiming to remain competitive, CCUS offers a way to not only decarbonize operations but also unlock new revenue streams.
1. Current State of CCUS in the U.S.
CCUS technologies, which capture CO2 emissions from industrial processes for storage or reuse, have seen increased investment in the U.S. thanks to incentives like the 45Q tax credit. The U.S. is already the global leader in CCUS deployment, with 12 of the world’s 35 large-scale projects in operation. However, the capacity of these projects remains far short of what’s needed to meet global climate goals. According to industry analysis, CCUS uptake needs to grow 120 times by 2050 for countries to achieve their net-zero commitments.
2. Why Oil and Gas is Positioned to Drive CCUS Growth
The oil and gas sector is uniquely positioned to scale up CCUS, thanks to its existing infrastructure and decades of expertise in managing complex industrial operations.
Existing Infrastructure
One of the major barriers to widespread CCUS adoption is the need for infrastructure to transport and store captured CO2. However, oil and gas companies already operate extensive pipeline networks and storage facilities, which can be adapted for CCUS with minimal investment. Aging oil fields nearing the end of their productive life offer ideal sites for CO2 storage.
Enhanced Oil Recovery (EOR) projects, which use CO2 injection to increase oil extraction, have already served as effective models for large-scale CO2 storage. For instance, the SACROC (Scurry Area Canyon Reef Operators Committee) project in the Permian Basin, Texas, has been operational since the 1970s and continues to use CO2 injection to enhance oil recovery while storing CO2.
Operational Expertise
The oil and gas industry’s expertise in managing large-scale industrial projects gives it a distinct advantage in scaling CCUS. From capturing CO2 at refineries to ensuring its safe transport and storage, the skills in gas handling and infrastructure management seamlessly transfer to CCUS operations. As this technology continues to evolve, the industry is well-positioned to seize new opportunities, especially as demand for low-carbon solutions grows.
3. Unlocking CCUS Potential: Key Opportunities
The outlook for CCUS in the oil and gas industry is promising, particularly in two key areas: hydrogen production and revenue generation from carbon credits and EOR.
Hydrogen Production with CCUS
One of the most exciting opportunities for CCUS lies in the production of low-carbon hydrogen, often referred to as “blue hydrogen” when created using captured CO2. The industry already has the infrastructure and expertise to lead in this growing market. Industry reports suggest that 22% of global final energy demand by 2050 will come from low-emissions fuels like hydrogen. By capturing and storing the CO2 produced during hydrogen production, oil and gas companies can meet the rising demand for clean hydrogen while simultaneously reducing emissions.
Revenue from Carbon Credits and EOR
CCUS also presents financial incentives through carbon credits and EOR. By capturing CO2 and using it for EOR, companies can boost oil production while earning credits through programs like the 45Q tax credit. Recent updates have increased the credit amounts to $85 per metric ton for CO2 stored in secure geological formations and $60 per metric ton for CO2 used in EOR, provided certain wage and labor requirements are met. This combination of environmental and financial benefits makes CCUS an attractive investment for the industry.
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