NOIA sees Gulf Coast’s potential for global CCUS hub

The National Ocean Industries Association (NOIA) has considered the benefits of carbon capture, use, and storage (CCUS) projects in the U.S. offshore region, concluding that such deployment presents an opportunity to speed up the energy transition, reduce emissions, reach net-zero goals and turn the Gulf Coast into a global CCUS hub, which would further bolster and position the emerging U.S. CCUS sector as a top-tier player within the market.

NOIA released its new policy paper – Carbon Capture, Use, & Storage: An Economic, Employment, & Climate Opportunity for the U.S Offshore Region – detailing key policy recommendations, vast advantages that the deployment of CCUS in the U.S. Gulf of Mexico can provide to the nation as it works to meet previously announced emissions reduction targets to address climate change.

The International Energy Agency says that CCUS provides an “important opportunity to achieve deep carbon dioxide (CO2) emissions reductions.” The white paper details the promise and opportunity which the U.S. Gulf of Mexico offers for CCUS and highlights the policies the Administration and Congress, as well as states, should support to make widespread offshore CCUS development and deployment a reality in the U.S.

The National Petroleum Council (NPC), which is a federally chartered advisory group, claims: “CCUS is an essential element in the portfolio of solutions needed to change the emissions trajectory of the global energy system. In its Fifth Assessment Report, the IPCC concluded that the costs for achieving atmospheric CO2 levels consistent with holding the increase in average global temperature to 2 degrees Celsius—referred to as a “2-degree Celsius world”—will be more than twice as expensive without CCUS.”

Moreover, as the progress towards addressing climate challenges will depend upon increased innovation, conservation, efficiency, resiliency, mitigation, and adaptation, CCUS presents an innovative approach to mitigating greenhouse gas emissions in NOIA’s view.

The International Energy Agency further adds: “Carbon capture, utilisation and storage (CCUS) technologies offer an important opportunity to achieve deep carbon dioxide emissions reductions in key industrial processes and in the use of fossil fuels in the power sector. CCUS can also enable new clean energy pathways, including low-carbon hydrogen production while providing a foundation for many carbon dioxide removal (CDR) technologies.”

Therefore, the widespread deployment of CCUS will be critical for achieving the climate change ambitions and goals that have been established by a diverse group of stakeholders around the world. Since it can serve as an important tool for balancing environmental, economic, and energy needs, U.S leadership in CCUS would help ensure the availability of abundant, reliable, and affordable domestic energy, while continuously driving down emissions.

NOIA’s research shows that the U.S. Gulf of Mexico offshore region provides tremendous advantages for an emerging U.S. CCUS sector, aided by vast geologic prospects for CO2 storage, extensive and established energy infrastructure along the Gulf Coast and throughout the outer continental shelf, proximity to industrial centres for capturing emissions, and an assessable engineering and energy knowledge base and workforce, along with associated research, development, and deployment (RD&D) capabilities.

In waters under both state and federal jurisdiction, the Gulf of Mexico presents a significant CO2 storage opportunity due to its recognized geologic capacity for long-term storage of CO2, including high porosity, high permeability, and a good seal to maintain containment.

NOIA believes that the Gulf Coast region is distinctly situated to emerge as a global hub for CCUS, as it is home to the full supply chain of energy companies with the engineering experience, expertise, and vision to deploy CCUS projects with the scale and efficiency necessary for success.

At the end of December 2021, Talos Energy published its second annual environmental, social and governance (ESG) report and the firm’s CEO used the occasion to portray the Gulf of Mexico and Gulf Coast as a ‘critical part of the global energy story’ due to hydrocarbon resources situated in the area, which could be developed with one of the lowest global emissions footprints.

In line with its strategy for the future, Talos increased its liquidity, added an additional lender, and expanded financing flexibility for energy transition opportunities – including carbon capture and storage – through a successful semi-annual borrowing base redetermination completed a week before the ESG report was released. It is also worth reminding that Talos made significant changes to its business in the second half of 2021, pursuing carbon capture and storage opportunities on the U.S. Gulf Coast and the Gulf of Mexico.

As a result, the company in August secured a carbon capture and storage site in Texas state waters, with the project site encompassing a total land area of over 40,000 gross acres. The award placed Talos among a very select group of domestic independent energy companies with a physical project site dedicated to carbon sequestration and storage.

Since the U.S. CCUS sector requires certainty and predictability in the regulatory system, both at the state and federal level, NOIA claims that improvements must be made in U.S. laws and regulations to foster growth and enable success in this sector. To this end, NOIA has included several recommendations within its white paper, including those which came directly from the National Petroleum Council.

The first recommendation urges the U.S. Department of the Interior and individual states to promptly promulgate regulations to authorize access to and use of pore space for geologic storage of CO2 in federal and state waters, establishing clear lease terms, processes, and regulations. In addition, the U.S. Department of the Interior is advised to take the lead in promptly completing necessary reviews under the National Environmental Policy Act for approvals of CCUS projects in the Gulf of Mexico.

NOIA further outlines that Congress should amend Section 45Q to eliminate the deadline for starting construction, extend the duration of credits, lower the CO2 volume threshold, and increase the value of credit for storage and use applications. Congress should also provide grant funding to help develop infrastructure to support the development of the CCUS sector in the Gulf of Mexico and along the Gulf Coast, as well as amend existing appropriations language to allow for all CO2 sources and fuel types in the allocation of RD&D funding for CCUS.

Moreover, the Administration should convene an industry and stakeholder forum to consider liability issues and create a CO2 infrastructure working group made up of relevant federal and state regulatory agencies and interested stakeholders to study the best way to harmonize the federal, state, and local permitting processes; grant access; administer eminent domain authority; facilitate corridor planning, and possibly coordinate tariffs.

The final recommendation calls for state and federal leaders to publicly embrace and promote offshore CCUS and the role it will play as a climate solution and economic stimulator, including the expansion of state-level credits. NOIA’s white paper also states that policymakers should seek to educate the public and build confidence in the emerging role of CCUS as a safe and secure means of managing emissions.