Exxon stands out as an unlikely supporter of America’s decarbonization efforts

Unlikely supporters of US decarbonization efforts are gaining increasing approval from the Biden administration as Big Oil begins to invest heavily in carbon capture and storage technology. Already experts on energy, industries seem to be turning to Exxon and other oil majors to help decarbonise the race toward net-zero emissions. ExxonMobil announced last month that it again saw positive quarterly earnings, of $19.7 billion for the third quarter of 2022. By this point, Exxon has made $15.2 billion in investments in 2022, with $5.7 billion going toward capital and exploration expenses. By the end of the year, the energy company expects to have invested $24 billion. In addition, its oil production reached record levels, at 560,000 oil equivalents with total production increasing by 50,000 barrels of oil equivalent per day, in response to growing demand as the world faced oil shortages due to sanctions imposed on Russian crude.

Darren Woods, Chairman and CEO, Exxon Corporation advertiser: “The investments we made, even through the pandemic, enabled us to ramp up production to meet consumer needs. Tight cost control and growth in high-margin petroleum and chemical products also contributed to earnings and cash flow growth in the quarter. At the same time, we are expanding our range Our business in the field of low-carbon solutions by signing the largest contract with customers of its kind for permanent carbon dioxide capture and storage, which demonstrates our ability to provide competitive emission reduction services to large industrial customers around the world.”

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In addition to announcing record profits and production levels this year, Exxon has been catching the eye of industry leaders and governments around the world by going full steam ahead with its decarbonization plans. This year, the US oil and gas company signed the largest commercial carbon capture and storage (CCS) agreement, aiming to sequester and store up to 2 million metric tons of carbon dioxide each year — the equivalent of taking 700,000 gasoline-powered cars off the road.

Exxon has partnered with CF Industries, a manufacturer of hydrogen and nitrogen products, to develop carbon capture and storage technologies for use in its operations. CF Industries will use the technology to capture up to 2 million metric tons of carbon dioxide2 annually from its Louisiana plant, beginning in 2025. This supports Louisiana’s goal of achieving net-zero carbon emissions by 2050. Exxon will support the project through additional partnerships along with companies with expertise in carbon capture and storage technologies. The oil company also signed a deal with EnLink Midstream to transport the CO22 To secure permanent underground geological storage.

And this month, Exxon announced another major carbon capture and storage deal with Indonesia’s state-owned Pertamina, for $2.5 billion. Indonesia hopes to set up a carbon dioxide capture and storage center, with the goal of decarbonizing key industry sectors, including refining, chemicals, cement and steel. This supports the government’s goal of reducing net carbon emissions by 2060. A joint study from the two companies showed a Potential carbon storage capacity of one billion tons in the oil and gas fields operated by Pertamina. Incorporating this technology into oil and gas operations is expected to enhance the longevity of fossil fuel production in Indonesia while supporting decarbonization, as well as boosting jobs in the industry.

Based on its recent penchant for global investments in carbon capture and storage, Exxon appears to have caught the eye of the Biden administration, which could become a major boost to Big Oil’s decarbonization efforts. The Inflation Reduction Act (IRA), which was launched in November, has several financing opportunities available to companies looking to combat climate change with renewable energy and decarbonization projects. Tax breaks will be offered to companies that use carbon dioxide capture and storage technologies in their operations to encourage widespread adoption of the technology.

As the United States gradually transitions from fossil fuels to renewable alternatives, many major oil and gas companies are looking to ensure the stability of their earnings through investments in renewable energy and other industries that will support their existence in a low-carbon world. An IRA could give Exxon and other major oil companies the incentives they need to invest heavily in CCS technologies as many industries seek support from CCS decarbonization experts.

Exxon currently aims to invest at least $15 billion in CCS by 2027. Company President Low Carbon Solutions Dan Ammann explained “We see a great business opportunity here.” He added, “We’re seeing interest from companies across a full range of industries, a full range of sectors, and a full range of geographies.” Meanwhile, Julio Friedman, chief scientist at Carbon Direct in New York, states, “We want oil companies to be active participants in carbon reduction… I expect this to become a groundbreaking project.”

With Exxon continuing to invest heavily in carbon capture and storage, it looks like a major player in Big Oil may be exactly what the US needs to help decarbonize its industries. With the support of the Biden administration, through the IRA, it certainly looks like oil and gas companies will be able to muster political support for their carbon cuts, even if they fail to limit their oil and gas production. Perhaps surprisingly, Exxon provides a blueprint for other companies investing in CCS to follow.

By Felicity Bradstock for Oilprice.com

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