California Resources Corporation Announces Carbon Dioxide Management Agreement for CTV’s First Permanent Carbon Storage Project in Northern California
04 Janeiro 2023 - 11:00AM
Business Wire
Project Aims to Sequester Initial 370,000
Metric Tons of CO2 Per Annum
California Resources Corporation (NYSE: CRC) today announced a
Carbon Dioxide Management Agreement (CDMA) between Carbon
TerraVault Holdings, LLC (CTV) and Grannus, LLC (Grannus), an
independent clean-tech company that is building a portfolio of blue
ammonia and hydrogen production facilities to supply the
agriculture, mobility and marine fuel markets, to sequester 370,000
metric tons (MT) of carbon dioxide (CO2) per annum at CTV III from
a new blue ammonia and hydrogen plant to be constructed in Northern
California. Called the Grannus Blue Ammonia and Hydrogen Project,
the project aims to be California’s first blue ammonia and hydrogen
facility producing 150,000 MT per annum of blue ammonia and 10,000
MT per annum of blue hydrogen.
The blue ammonia facility will use Grannus’ patented process
which is expected to operate a virtually emissions-free facility
once the CO2 is sequestered. The facility will produce blue
hydrogen which is combined with nitrogen to produce ammonia for use
in nitrogen-based fertilizers, while the generated CO2 will be
captured and then stored permanently underground by CTV. California
produces over a third of the country’s vegetables and
three-quarters of the country’s fruits and nuts, providing a strong
ammonia market in the state. The blue ammonia fertilizer is
expected to be supplied to CALAMCO, an investor in Grannus and a
California-based cooperative made up of approximately 900 dealer
and grower members, which represents the majority of agricultural
ammonia demand in the state.
“We are thrilled for the expansion of our decarbonization
efforts in Northern California where we see an incredible amount of
carbon capture and storage (CCS) opportunities,” said Mac
McFarland, CRC’s President and Chief Executive Officer. “Our
partnership with Grannus begins a new chapter of carbon storage in
Northern California and also positions Grannus as one of the
leading clean-tech companies in the state by introducing a blue
ammonia facility in San Joaquin County with permanent CO2 storage
through Carbon TerraVault.”
“As a next generation clean-tech company, we are excited to
partner with such a knowledgeable carbon management provider as
Carbon TerraVault due to their unique vault positioning in the
heart of Northern California’s industrial sectors, strong
subsurface expertise, and their leadership in California’s new
energy economy and carbon management,” added Matthew Cox, Grannus’
Chief Executive Officer. “California’s first blue ammonia
fertilizer production facility is expected to further reduce the
carbon intensity of California’s agricultural sector while
delivering environmentally conscious food to every American’s
doorstep. We look forward to furthering our decarbonization efforts
in California.”
CDMA Highlights:
- The Grannus Blue Ammonia and Hydrogen Project will employ a
patented Partial Oxidation (POx) technology with an integrated
carbon capture system. The facility is expected to produce 150,000
MT per annum of blue ammonia and 10,000 MT per annum of blue
hydrogen. This translates to an initial 370,000 MT per annum of
associated CO2 that will be permanently sequestered at CTV III
which has a total expected CO2 storage capacity of 71 million
MT
- Grannus has entered into a master ammonia sales agreement with
CALAMCO in an amount up to its total ammonia requirements. A
binding offtake agreement with respect to the Grannus Blue Ammonia
and Hydrogen Project is subject to finalization and approval by
Grannus and CALAMCO
- Final Investment Decision (FID) for the project and commercial
operational dates are being further refined; however, at the latest
the project is expected to be commercial by the end of 2027
aligning with CTV’s goal of 5 million MT per annum by end of
2027
- CTV will provide infield transportation and a permanent CO2
storage site 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 in proximity to the CTV III vault 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 CCS
projects, is inherently incorporated into the base design of the
new Grannus Blue Ammonia and Hydrogen facility
- The CDMA provides Grannus with access to 50 surface acres with
the option for an additional 50 acres if expansion is pursued
- CTV will have the right to take a majority stake in the total
outstanding equity of the project company that holds the Grannus
Blue Ammonia and Hydrogen Project
- CTV will have an option to purchase equity in Grannus as well
as a right of first refusal to provide storage services for
subsequent Grannus ammonia and hydrogen projects in California
- 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
FID
The construction process of the new Grannus Blue Ammonia and
Hydrogen Project and associated CCS infrastructure is expected to
provide at its peak approximately 250 temporary construction jobs
and 31 permanent technical jobs, further benefiting California’s
economy and supporting the state’s energy transition ambitions.
About Carbon TerraVault
Carbon TerraVault Holdings, LLC (CTV), a subsidiary of CRC,
provides services that include the capture, transport and storage
of carbon dioxide for its customers. CTV is engaged in a series of
CCS projects that inject carbon dioxide (CO2) captured from
industrial sources into depleted underground reservoirs and
permanently store CO2 deep underground. For more information about
CTV, please visit www.carbonterravault.com.
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 Grannus
Grannus, LLC is an independent clean-tech company that is
building a portfolio of blue ammonia and hydrogen production
facilities to supply the agriculture, mobility and marine fuel
markets. Grannus is focused on selecting technologies and processes
that improve the project’s environmental profile while
simultaneously delivering attractive returns to stakeholders.
Grannus was formed in 2012 to develop and bring to market next
generation hydrogen and ammonia production process technology.
Grannus’ patented process replaces the traditional steam methane
reformer with a more efficient partial oxidation boiler. This novel
process creates synthesis gas at the lowest emissions level in the
industry at efficiency levels exceeding existing best-of-class
plant designs. For more information, visit www.grannusllc.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
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"believe," "seek," "see," "will," "would," “estimate,” “forecast,”
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similar expressions are generally intended to identify
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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;
- 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 timing and ability of the Grannus Blue Ammonia and Hydrogen
Project to achieve expected production volumes of ammonia and
hydrogen and associated CO2 and the ability of the CTV to sequester
such CO2 volumes;
- the negotiation of a binding offtake agreement between Grannus
and CALAMCO for the Grannus Blue Ammonia and Hydrogen Project;
- 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/20230104005330/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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