California Resources Corporation Announces Carbon Dioxide Management Agreement For CTV’s First Permanent Carbon Storage Project
07 Dezembro 2022 - 10:55AM
Business Wire
Project Aims to Sequester Initial 100,000
Metric Tons of CO2 Per Annum in 2025
California Resources Corporation (NYSE: CRC) today announced a
Carbon Dioxide Management Agreement (CDMA) between Carbon
TerraVault JV Holdco, LLC (CTV JV) and Lone Cypress Energy
Services, LLC (Lone Cypress), an independent energy company focused
on the development of low-carbon hydrogen generation facilities and
energy infrastructure, to sequester 100,000 metric tons (MT) of
carbon dioxide (CO2) per annum from a newly constructed blue
hydrogen plant at the Elk Hills Field in Kern County. Called the
Lone Cypress Hydrogen Project, the project aims to be California’s
first blue hydrogen facility producing 30 tons per day and has the
potential to expand to 60 tons per day of blue hydrogen with up to
200,000 MT of CO2 sequestration per annum.
Blue hydrogen is a net zero-carbon intensity fuel produced from
natural gas. The CO2 generated during the methane reforming process
is captured and will be stored permanently underground.
“We are excited to be at the forefront of the energy transition
in California. CRC is enabling the net zero energy economy by
partnering with Lone Cypress to site a brand-new hydrogen facility
at our Elk Hills Field as well as offering permanent CO2
sequestration through Carbon TerraVault,” said Mac McFarland, CRC’s
President and Chief Executive Officer. “Because capture and
compression are built into the project development, we anticipate
limited capital requirements from the CTV JV and EBITDA per metric
ton within our previously stated range. This CTV storage project is
a meaningful step forward in CRC’s rollout of carbon capture and
sequestration technology across the state and is the first of, what
we believe, will be many projects to come. We are also excited
about the ability to leverage our Elk Hills asset to create a Net
Zero Industrial Park by combining green field development and
carbon sequestration.”
CDMA Highlights:
- The CDMA frames the contractual terms between parties by
outlining the material economics and terms of the project and
includes conditions precedent to close. The CDMA provides a clear
path for the parties to reach final definitive documents and a
Final Investment Decision (FID)
- The Lone Cypress Hydrogen Project will employ a proprietary
steam methane reformation technology with an integrated carbon
capture system. The facility is expected to produce 30 tons per day
of hydrogen at startup with the ability to expand to 60 tons per
day of hydrogen which is under consideration. This translates to an
initial 100,000 MT per annum of associated CO2 that will be
permanently sequestered through CTV or 200,000 MT per annum of CO2
that will be permanently sequestered if the project is
expanded
- Project FID is targeted in late 2023, with full operations by
the end of 2025, in line with the CTV JV’s stated goal of first
injection in 2025
- The CDMA provides Lone Cypress with access to 50 surface acres
at the Elk Hills Field with the option for an additional 50 acres
if expansion to a 60 ton per day project is pursued
- The CTV JV will provide infield transportation and a permanent
CO2 sequestration site at 26R in exchange for an injection fee on a
per ton basis that fits within the previously disclosed economic
type-curve for projects that require a storage-only solution
- The project’s location at Elk Hills will eliminate the need for
long haul CO2 transportation and certain midstream capital
requirements
- CO2 capture capital will be effectively eliminated as CO2
capture equipment, the most capital-intensive portion of carbon
capture and sequestration (CCS) projects, will be built into the
design of the new Lone Cypress hydrogen facility
- These project attributes will enable CTV JV and Lone Cypress to
supply cost competitive, blue hydrogen to California’s burgeoning
zero emissions mobility and industrial markets
- In addition, the CTV JV has the right to take a majority equity
stake in the project, as well as to provide sequestration services
for all subsequent Lone Cypress hydrogen projects in
California
“Partnering with CTV JV represents an incredible opportunity to
continue the growth of our hydrogen and carbon capture businesses.
California is at the forefront of the global energy transition and
through this partnership, we intend to be a leader in its
low-carbon fuels market,” said Greg Brooks, President and Founder
of Lone Cypress Energy Services. “CTV’s unique expertise in
subsurface operations and permitting, large CO2 storage position
and ability to deliver on highly complex and capital-intensive
projects provide us with a clear line of sight as we continue to
evaluate additional projects in California. We are excited to
generate the first blue hydrogen molecule in the state of
California and provide the market with a low-cost low-carbon option
to meet its decarbonization goals.”
In line with Governor Newsom’s recently announced climate
measures, the construction process of the new Lone Cypress Hydrogen
Project and associated CCS infrastructure is expected to provide at
its peak approximatively 125 temporary construction jobs and 18
permanent technical jobs, further benefitting California’s economy
and supporting the state’s leading climate goals.
About Carbon TerraVault Joint
Venture
Carbon TerraVault Joint Venture (CTV JV) is a carbon management
partnership focused on carbon capture and sequestration
development, and was formed between Carbon TerraVault (CTV), a
subsidiary of CRC, and Brookfield Renewable. The CTV JV develops
both infrastructure and storage assets required for CCS development
in California. CRC owns 51% of the CTV JV with Brookfield Renewable
owning the remaining 49% interest.
About California Resources
Corporation
California Resources Corporation (CRC) is an independent oil and
natural gas company committed to energy transition in the sector.
CRC has some of the lowest carbon intensity production in the US
and CRC is focused on maximizing the value of our land, mineral and
technical resources for decarbonization by developing CCS and other
emissions reducing projects. For more information about CRC, please
visit www.crc.com.
About Lone Cypress Energy
Services
Lone Cypress Energy Services, LLC is an independent energy
company focused on the development and operation of infrastructure
across the entire energy value chain. Headquartered in Tulsa, OK,
Lone Cypress offers a full suite of technology-enabled solutions
including project development, project management, EPC contracting,
and asset operations. Lone Cypress specializes in the development
of hydrogen generation and distribution projects, waste to energy
plant solutions, and traditional oil and gas midstream facilities.
For more information, please visit
www.lonecypressenergyservices.com.
Forward-Looking
Statements
This document contains statements that CRC believes to be
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than historical facts
are forward-looking statements, and include statements regarding
CRC's future financial position, business strategy, projected
revenues, earnings, costs, capital expenditures and plans and
objectives of management for the future. Words such as "expect,"
“could,” “may,” "anticipate," "intend," "plan," “ability,”
"believe," "seek," "see," "will," "would," “estimate,” “forecast,”
"target," “guidance,” “outlook,” “opportunity” or “strategy” or
similar expressions are generally intended to identify
forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in, or implied by, such
statements.
Although CRC believes the expectations and forecasts reflected
in CRC's forward-looking statements are reasonable, they are
inherently subject to numerous risks and uncertainties, most of
which are difficult to predict and many of which are beyond CRC's
control. No assurance can be given that such forward-looking
statements will be correct or achieved or that the assumptions are
accurate or will not change over time. Particular uncertainties
that could cause CRC's actual results to be materially different
than those expressed in CRC's forward-looking statements
include:
- fluctuations in commodity prices and the potential for
sustained low oil, natural gas and natural gas liquids prices;
- equipment, service or labor price inflation or
unavailability;
- legislative or regulatory changes, including those related to
(i) the location, drilling, completion, well stimulation,
operation, maintenance or abandonment of wells or facilities, (ii)
the management of energy, water, land, greenhouse gases (GHGs) or
other emissions, (iii) the protection of health, safety and the
environment, (iv) CRC's ability to claim and utilize tax credits or
other incentives, or (v) the transportation, marketing and sale of
CRC's products and CO2;
- availability or timing of, or conditions imposed on, permits
and approvals necessary for drilling or development activities and
carbon management projects;
- changes in business strategy and CRC's capital plan;
- lower-than-expected production, reserves or resources from
development projects or acquisitions, or higher-than-expected
decline rates;
- incorrect estimates of reserves and related future cash flows
and the inability to replace reserves;
- the recoverability of resources and unexpected geologic
conditions;
- CRC's ability to successfully execute on the construction and
other aspects of the infrastructure projects and enter into third
party contracts on contemplated terms;
- CRC's ability to realize the benefits contemplated by the
business strategies and initiatives related to energy transition,
including carbon capture and storage projects and other renewable
energy efforts;
- CRC's ability to successfully identify, develop and finance
carbon capture and storage projects and other renewable energy
efforts, including those in connection with the Carbon TerraVault
JV;
- CRC’s ability to finalize definitive documents and reach a
final investment decision with respect to the project contemplated
by a carbon development management agreement, and its ability to
enter into new carbon development management agreements that are
under discussion with other counterparties;
- the ability of the Lone Cypress Hydrogen Project to achieve
expected production volumes of hydrogen and associated CO2 and the
ability of the CTV JV to sequester such CO2 volumes;
- global geopolitical, socio-demographic and economic trends and
technological innovations;
- changes in CRC's dividend policy and its ability to declare
future dividends under its debt agreements;
- changes in CRC's share repurchase program and its ability to
repurchase shares under its debt agreements;
- production-sharing contracts' effects on production and
operating costs;
- limitations on CRC's financial flexibility due to existing and
future debt;
- insufficient cash flow to fund CRC's capital plan and other
planned investments, stock repurchases and dividends;
- insufficient capital or lack of liquidity in the capital
markets or inability to attract potential investors;
- limitations on transportation or storage capacity and the need
to shut-in wells;
- inability to enter into desirable transactions, including
acquisitions, asset sales and joint ventures;
- CRC's ability to achieve expected synergies from joint ventures
and acquisitions;
- CRC's ability to utilize its net operating loss carryforwards
to reduce its income tax obligations;
- CRC's ability to successfully gather and verify data regarding
emissions, its environmental impacts and other initiatives;
- the compliance of various third parties with CRC's policies and
procedures and legal requirements as well as contracts it enters
into in connection with CRC's climate-related initiatives;
- the effect of CRC's stock price on costs associated with
incentive compensation;
- changes in the intensity of competition in the oil and gas
industry;
- effects of hedging transactions;
- climate-related conditions and weather events;
- disruptions due to accidents, mechanical failures, power
outages, transportation or storage constraints, natural disasters,
labor difficulties, cyber-attacks or other catastrophic
events;
- pandemics, epidemics, outbreaks, or other public health events,
such as the COVID-19; and
- other factors discussed in Part I, Item 1A – Risk Factors in
CRC's Annual Report on Form 10-K and its other SEC filings
available at www.crc.com.
CRC cautions you not to place undue reliance on forward-looking
statements contained in this document, which speak only as of the
filing date, and CRC undertakes no obligation to update this
information. This document may also contain information from third
party sources. This data may involve a number of assumptions and
limitations, and CRC has not independently verified them and do not
warrant the accuracy or completeness of such third-party
information.
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version on businesswire.com: https://www.businesswire.com/news/home/20221207005123/en/
Joanna Park (Investor Relations) 818-661-3731
Joanna.Park@crc.com
Richard Venn (Media) 818-661-6014 Richard.Venn@crc.com
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