Chevron pays $50 million to join JV for CCS hub in Texas
U.S.-based companies – Talos Energy, Chevron, and Carbonvert – have officially concluded the expansion of the joint venture (JV), which aims to develop a hub-scale carbon capture and sequestration (CCS) project offshore Jefferson County, Texas.
This announcement comes less than a month after Talos Energy revealed that a memorandum of understanding (MOU) was signed with Carbonvert and Chevron for an expanded joint venture to develop the Bayou Bend offshore CCS hub, which was previously held by Talos and Carbonvert. This deal is in line with Talos’ previously disclosed aims 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.
As a reminder, a joint venture between Talos and Carbonvert – known as Bayou Bend CCS – was the winning bidder in August 2021 for the Texas General Land Office’s (GLO) Jefferson County, Texas carbon storage lease, located in state waters offshore Beaumont and Port Arthur, Texas. In March 2021, this joint venture executed definitive lease documentation with the Texas General Land Office to formalise the previously announced CCS site.
In an update on Tuesday, Talos Energy informed about the execution of definitive documentation and closing of the expanded joint venture to develop the Bayou Bend CCS offshore carbon capture and sequestration hub, effective from 1 May 2022. This was successfully completed in coordination with the company’s Talos Low Carbon Solutions division, Carbonvert, and Chevron’s Chevron New Energies division.
Based on the terms of this deal, Chevron has acquired a 50 per cent stake in the expanded Bayou Bend CCS joint venture for a gross consideration of $50 million payable to Talos and Carbonvert. This sum consists of $30 million of gross upfront cash and up to $20 million of gross capital cost reimbursement, expected to cover Talos and Carbonvert capital expenditures through the project’s final investment decision (FID).
After the completion of this transaction, Talos remains the operator of this JV and the equity interests are now distributed among the three players with Chevron getting a 50 per cent stake while Talos and Carbonvert are retaining 25 per cent each.
Furthermore, Talos says that the three companies have also established an area of mutual interest (AMI) over the full 231,000-acre Jefferson County offshore region contemplated in the State of Texas’s original request for proposal, aligning the players for future expansion opportunities.
Preliminary estimates for the Bayou Bend CCS project site indicate that it could potentially sequester 225 to 275 million metric tons of carbon dioxide (CO2) from industrial sources in the area.