Chevron joins JV for development of offshore carbon capture and sequestration hub
Three U.S.- based players – Talos Energy, Chevron, and Carbonvert – have inked a deal for a proposed joint venture (JV) expansion to enhance a hub-scale carbon capture and sequestration (CCS) project, located offshore Jefferson County, Texas.
Back in August 2021, a joint venture between Talos and Carbonvert – known as Bayou Bend CCS – was the winning bidder for the Texas General Land Office’s (GLO) Jefferson County, Texas carbon storage lease, located in state waters offshore Beaumont and Port Arthur, Texas. Talos says that the Bayou Bend CCS lease is the first and only offshore lease in the U.S. dedicated to CO2 sequestration.
A few months later, Talos’ joint venture with Carbonvert executed definitive lease documentation with the Texas General Land Office to formalise the previously announced CCS site. At the time, Talos revealed its hopes of finding anchor industrial partners to work on reducing industrial emissions through its CCS initiatives along the U.S. Gulf Coast and the Gulf of Mexico.
In an update on Tuesday, Talos Energy revealed that it has signed a memorandum of understanding (MOU) through its Talos Low Carbon Solutions division with Carbonvert and Chevron’s Chevron New Energies division for an expanded joint venture to develop the Bayou Bend offshore CCS hub, currently held by Talos and Carbonvert.
Timothy S. Duncan, President and CEO of Talos, remarked: “We believe the addition of Chevron greatly enhances the execution of this hub-scale project and we hope this sends a clear signal to industrial partners in the Beaumont and Port Arthur region that we are focused on making Bayou Bend the premier CCS project in southeast Texas.”
In exchange for consideration of cash at closing and capital cost carry through the project’s final investment decision (FID), Talos and Carbonvert would contribute the Bayou Bend CCS lease to an expanded joint venture including Chevron, based on the terms of this deal. In line with this, equity interests in the joint venture would be 25 per cent Talos, 25 per cent Carbonvert, and 50 per cent Chevron with Talos remaining as the operator upon the closing of the joint venture.
Alex Tiller, President and CEO of Carbonvert, commented: “This project is a catalyst that enables dramatic regional carbon emissions reduction to the benefit of local industry, the global community, and future generations. We look forward to the opportunity to partner with Chevron on such a monumental project supporting decarbonization and partnering with customers on their paths to net zero.”
According to the three U.S. players, the creation of the proposed joint venture is subject to the negotiation of definitive agreements with customary closing conditions, including regulatory approval.
Chris Powers, Vice President of Carbon Capture, Utilization, and Storage (CCUS) for Chevron New Energies, explained: “Since our establishment of Chevron New Energies, we have been consistent in our communication that partnerships will be required to grow successful lower carbon businesses. This venture is an example of the potential that partnering can have in moving large-scale lower-carbon projects forward.”
Based on Talos and Carbonvert’s preliminary estimates, the Bayou Bend CCS project site – which encompasses over 40,000 gross acres – could potentially sequester 225 to 275 million metric tons of carbon dioxide (CO2) from industrial sources in the area.
“Talos and Carbonvert have worked to rapidly advance this project, and as a priority project for Chevron in a key industrial area, we are excited to contribute our experience and capability to develop the leading offshore carbon sequestration hub for the region,” concluded Powers.