Gulf of Mexico focused oil company Talos Energy and European carbon capture and storage firm Storegga have formed an exclusive joint venture to source, evaluate, and develop carbon capture and storage ("CCS") project opportunities on the United States Gulf Coast and Gulf of Mexico.
The partnership is targeting state and federal waters offshore Texas, Louisiana, Mississippi, and Alabama.
"The Partners are actively exploring opportunities with counterparties along the CCS value chain," Talos said.
"Under the joint venture framework, the Partners, in collaboration, will originate and mature CCS ventures with emitters, infrastructure providers, service companies, and financing partners, among others. The joint venture combines the strengths of Talos's offshore operational and sub-surface expertise with Storegga's leading end-to-end CCS project experience," Talos said.
Under the terms of the agreement, as individual CCS projects are matured in the future, each will be ring-fenced with separate operating agreements, financing structures, and the possibility of additional working interest partners. The agreement requires zero up front capital commitments, and the Partnership will share costs 50/50 in the initial phases. Talos is designated as the operating partner of the joint venture, the oil and gas company added.
Storegga is a lead developer of the Acorn CCS and Acorn Hydrogen Projects in the UK, and also is developing a direct carbon air capture ("DAC") project.
The Acorn project is the most advanced large-scale CCS project in the United Kingdom with final investment decision ("FID") expected in 2022.
Prime Location for Offshore Carbon Capture
"The United States Gulf Coast is a prime location for offshore carbon capture projects in the U.S. The area contains some of the nation's highest concentrations of power generation, industrial and petrochemical facilities, including 100+ facilities emitting more than 1,000,000 tons of CO2 emissions per year," Talos said.
In addition to the large industrial multi-national companies and conglomerates present in the region, there is also a high density of smaller private and "middle-market" industrial sites which may require CCS solutions in the future, Talos added.
"This critical industrial network is immediately adjacent to a large natural carbon storage province located offshore in shallow waters in the Gulf of Mexico Shelf and potentially holding over 30 gigatons of available storage in geological structures with the necessary rock properties and fluid type to effectively store significant CO2 volumes.
"With its long history as a prolific energy-producing region, the Gulf of Mexico also offers vast infrastructure and service networks as well as a capable labor force. These essential technical and commercial elements can supply the growing demand for large-scale CCS emissions solutions in one of the biggest industrial regions in the world," Talos said.
Talos President and Chief Executive Officer Timothy S. Duncan said: "We have a responsibility to deliver affordable, reliable energy with the lowest carbon footprint possible, and this joint venture allows us to expand our impact beyond our own assets to provide solutions for removing emissions from critical industrial sectors in our backyard."
Storegga Chief Executive Officer Nick Cooper said: "The rapid deployment of CCS and carbon management value chains requires appropriate geological storage for carbon sequestration, access to emitters and existing infrastructure, and partnerships with experienced, like-minded organizations that share the desire to make this happen. The US Gulf Coast offers significant potential for CCS and we are delighted to be partnering with Talos, a leading offshore operator. The joint venture demonstrates the international opportunities for Storegga as an independent developer of CCS infrastructure. We hope that it will be the first of many."