Project approval follows CRC's recent receipt of final Class VI well permits from the Environmental Protection Agency (EPA) for underground injection and storage of carbon dioxide into the 26R reservoir, located at CRC's Elk Hills Field in Kern County, California. The 26R reservoir is part of CTV's joint venture with Brookfield.
"We are pleased to advance California's first CCS project to the next stage of its development highlighting our ability to deliver carbon management solutions while reducing our own emissions," said Francisco Leon, CRC's President and Chief Executive Officer. "This project strengthens Carbon TerraVault's economic opportunities and positions us to create lasting value for our shareholders and partners. Carbon TerraVault remains at the forefront of providing innovative decarbonization solutions that support a cleaner, affordable, and reliable energy future for California."
26R is one of two depleted oil and natural gas reservoirs that comprise the CTV I storage site, with an expected injection rate of 1.46 million metric tons of CO2 storage per annum. Total estimated capacity of 26R is up to 38 million metric tons.
"This project represents another step forward in California's world-leading pathway to combat climate change and achieve carbon neutrality over the next two decades," said California Natural Resources Secretary Wade Crowfoot. "While slashing carbon pollution is the main thrust of our climate programs, capturing and removing carbon from our atmosphere is also essential to meeting our carbon targets. This project, which repurposes fossil fuel extraction infrastructure and expertise to sequester carbon, is a forward-looking way to remove emissions while creating jobs in an emerging sector. Simply put, getting projects like this operating in a safe and effective way is critical for our climate progress."
Cryogenic Gas Plant CCS Project highlights
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Capture and Sequestration: CRC plans to capture and, through its joint venture with Brookfield (CTV JV), permanently store up to 100 thousand metric tons (KMTPA) of CO2 per annum from its Elk Hills cryogenic gas plant in the 26R reservoir.
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First Injection: Operations are expected to commence in late 2025.
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Capture Incentives and Revenue Equivalents: CRC is expected to qualify for $85 per metric ton in 45Q tax credits, with potential for Low Carbon Fuel Standard (LCFS) credit generation and reduction in Cap-and-Trade (C&T) liabilities pending California Air Resources Board (CARB) rulemaking. Decarbonized gas throughput is projected to increase propane recovery by up to 100 barrels of natural gas liquids per day.
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Operating Costs: The project's proximity to CRC's 26R reservoir will minimize transportation costs associated with sequestration.
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Operating Profitability: Through this project, CTV JV is projected to generate EBITDA1 of $50 - $60 per metric tons in sequestration fees paid by CRC, consistent with the economic type curve2 for CTV storage-only projects.
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Capture Capital Investment: CRC's capture project capital spending is estimated at $14 - $18 million.
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Reduced GHG Emissions: Project expected to lower Scope 1 and 2 emissions from the Elk Hills Power Plant by up to 7%.
CRC said its internal rate of return from this capture and storage project is expected to be at the high-end of its previously disclosed range of 10% - 30%.