64 FORTUNE APRIL 2020aged project. What’s more, the IPCC says, CO 2 tends to grow
more “immobilized” over time, and thus a project could
retain essentially all of its CO 2 “for up to millions of years.”
The question is how to ensure CCS is done well. Regula-
tors want to prevent CO 2 from seeping into other under-
ground areas—either into someone else’s property, or into
geologic layers, such as drinking-water sources, where it
could cause harm. They also want to make sure it doesn’t
waft back up, years or even centuries later. If sequestered
CO 2 leaked into the sky, its climate-saving value would be
negated, and the polluter that pocketed subsidies for cap-
turing it would have contributed no lasting benefit.
The industry’s D.C. drama boils down to whether an in-
dependent third party should verify that oil companies have
safely stored as much CO 2 as they claim. An industry group
that Oxy helps fund, the Carbon Capture Coalition, whose
roster also includes Shell, recently wrote to the IRS that
such verification is “vitally important” to the viability of the
credit. That puts them at odds with another group, the En-
ergy Advance Center, which lists ExxonMobil and Denbury
Resources, both of which have extensive CCS operations,
among its members; it opposes mandatory third-party
verification. BP recently quit that group, and the company
endorsed mandatory verification.
Beyond Washington, however, Oxy is trying to loosen
some rules. Even richer than the federal tax break is a
subsidy that California is rolling out. When companies
can substantiate that they’ve used low-carbon processes to
produce transportation fuel they sell in California, the state
grants them “carbon credits,” which they can sell to other,
less-green fuel producers. A credit representing one metric
ton of CO 2 saved currently sells for about $200. And that’s
cash, not merely a credit against taxes. Oxy has tussled with
California over what it must do to monitor man-made CO 2
that Oxy wants to inject at West Seminole. The source of
that gas: two ethanol plants in the Texas Panhandle.other subsidy, this one for a pipeline to ferry
human-spewed CO 2 to the Permian. In case
the government doesn’t concur, Hollub tells
me, Oxy is wooing infrastructure-investment
funds. Her ultimate goal: Cheaper CO 2 ,
because it and electricity are the biggest costs
in Oxy’s Permian operation. By “the mid to
latter part of the 2020s,” Hollub says, a shift
to anthropogenic gas should cut Oxy’s CO 2
costs by 20% to 30%.
Many other big oil companies, consultants
and bankers tell me, are also angling for CO 2
pipeline incentives. “They can’t let anyone
know they’re jockeying,” explains one well-
placed consultant who doesn’t want to be
identified, “because then people would know
they’re not doing it for society—they’re doing
it for themselves.”TO MONETIZE CCS, com-
panies need permission
from regulators to shoot
CO 2 underground. The rules
governing such storage are
young, they differ among jurisdictions, and
they have yet to be tested. This spring, they’re
prompting lobbyist combat in Washington,
where the Internal Revenue Service is formu-
lating rules to govern who qualifies for the
federal tax credit—and in California, where a
potentially bigger financial prize awaits.
In natural CO 2 deposits, rock securely traps
gas much as, elsewhere, it traps oil. The IPCC,
the global climate-science group, says more
than 99% of injected CO 2 is “likely” to stay put
for 1,000 years in a well-designed and man-A PLANET IN CRISIS : CARBON CAPTUREONE WAY TO CLEAR THE AIR “Direct air capture” technology aims to vacuum man-made CO^2 out of the aGiant fans pull air into a
“contactor” where it passes
over surfaces that have
potassium hydroxide
solution flowing over them.The solution
chemically
binds with the
CO2 molecules,
removing them
from the air and
trapping them
in the liquid
solution.The CO2
contained in this
carbonate
solution is
concentrated and
purified through
multiple chemical
processes to
create small
pellets.CAR.W.04.20.XMIT.indd 64 FINAL 3/10/2020 8:24:18 PM