💰 Dollar, Dollar, bills y’all: DOE funding $2.5 billion in carbon management

Good Morning. This is the Sunya Scoop. The newsletter that takes energy transition news and turns it into an easy-to-read email for you.

Here’s what we have for you today:

• DOE plans to fund $2.5 billion in carbon management

• Denbury’s latest in CCUS

• California Resource Corp to spin off CCUS

• Chesapeake’s sustainability and new energy ventures

• Cheniere LNG plans for major expansion

• China strikes another long-term LNG deal

• Fervo to build combined geothermal and DAC facility

• Visual of the week – China built 2 coal plants a week last year

CARBON CAPTURE

DOE announces $2.5 billion of funding for carbon management

• The DOE announces $2.52 billion in funding for two carbon management programs to reduce carbon dioxide emissions from electricity generation and hard-to-abate industrial operations

• The two programs are Carbon Capture Large-Scale Pilots and Carbon Capture Demonstration Projects Program

• The funding will accelerate the demonstration and deployment of carbon management technologies, create good-paying manufacturing jobs, reduce pollution, and reinforce America’s global competitiveness in the clean energy technologies of the future

• The electricity generation and industrial sectors account for a large portion of U.S. carbon emissions

• The Carbon Capture Large-Scale Pilots program includes up to $820 million for up to 10 projects focused on de-risking transformational carbon capture technologies

• The Carbon Capture Demonstration Projects Program includes up to $1.7 billion for approximately six projects to demonstrate commercial-scale carbon capture technologies integrated with CO2 transportation and geologic storage infrastructure

It’s earnings season so here’s a snapshot of latest updates:

CARBON CAPTURE

Denbury’s latest in CCUS

• New CO2 transportation and/or storage agreements bring cumulative to over 22 Mmtpa

• Executed agreements with HIF Global and Monarch Energy Development for the transportation of 2 mm metric tons per year and 0.4 Mmtpa of industrial-sourced CO2

• Finalized an agreement to develop a CO2 sequestration site in Campbell Co, Wyoming, with potential CO2 sequestration capacity of 40 million metric tons

• Invested in ION Clean Energy and Aqualung Carbon Capture (membrane technology)

• 2023 CCUS goals include:

  • executing additional transport and/or storage agreements to reach 30 Mmtpa of CO2

  • expanding the company’s dedicated CO2 storage portfolio

  • submitting Class VI permits to the EPA on at least 4 CO2 sequestration sites

  • drilling at least 2 stratigraphic test wells in 2023

  • strategic partnerships and equity investments around the entire value chain

CARBON CAPTURE

CRC to spin off CCUS

• California Resource Corp to manage carbon management business on a standalone basis

• Considering strategic options, including potential separation from E&P business

• Formed Carbon TerraVault JV with Brookfield Renewable for carbon capture and sequestration development

• Signed carbon management service agreements with Lone Cypress Energy and Grannus (covered earlier this year) for permanent carbon storage

• Focused on signing up additional emitter projects in 2023

• Advancing CalCapture and California Direct Air Capture Hub

• Submitting additional Class VI permit applications

• Established separate board for Carbon TerraVault to grow carbon management business.

SUSTAINABILITY & NEW ENERGY VENTURES

Chesapeake’s sustainability and new energy ventures

• ~750,000 mt CO2e of operational emissions abated for ~$25mm spend

• 2,000+ continuous methane emission monitoring devices were installed and 19,000 pneumatic devices were retrofitted since 2021

• Achieved independent responsibly sourced gas certification for all natural gas assets in 2022, first operator to do across 2 major plays with 6 bcf/d produced and marketed gas

• Aerial Gas Mapping LiDAR scans were conducted semiannually in 2022 to detect emissions across all assets and facilitate prompt remediation efforts

• Plans to invest ~$300mm in Momentum CCS, a project highlighted in our 2022 Deals That Caught Our Eye which will account for ~30% of their interim GHG target

• Investing in geothermal internal evaluation and external projects

• Expanded its 2035 net zero goal to include Scope 1 and 2 GHG emissions and interim 2025 GHG and methane intensity targets lowered to 3.0 mt CO2e/boe and 0.02%

LNG

Cheniere LNG plans for major expansion

• Cheniere has initiated the pre-filing review process for the proposed Sabine Pass Stage 5 Expansion Project, adjacent to the existing Sabine Pass Liquefaction Project.

• The SPL Expansion Project is designed for a total production capacity of approximately 20 million tonnes per annum of liquefied natural gas (LNG).

• The project is being designed to include up to three large-scale liquefaction trains, each with a production capacity of approximately 6.5 million tonnes per annum of LNG.

• It also includes a boil-off-gas re-liquefaction unit, two 220,000 cubic meter LNG storage tanks, and accommodations for waste heat recovery and carbon capture from acid gas removal units.

• Feed gas related to the project is expected to be transported via a combination of new and existing pipelines.

• Cheniere Partners has engaged Bechtel Energy, Inc. to complete a Front-End Engineering and Design study of the SPL Expansion Project.

• The project’s development is subject to all required regulatory approvals and permits, sufficient commercial and financing arrangements, and a final investment decision.

LNG

China strikes another long-term LNG supply deal

• China Gas Holdings, one of China’s largest gas distributors, has signed two 20-year liquefied natural gas (LNG) supply contracts with US exporter Venture Global.

• China Gas Holdings would buy a total of two million tonnes per year of LNG from Venture Global under the two contracts, beginning in 2027.

• The LNG would come from two Venture Global projects in Louisiana – Plaquemines LNG and the CP2 LNG, with China Gas receiving 1 mm tonnes annually from each.

• The contracts were agreed on a free-on-board basis and their prices were linked to the US benchmark Henry Hub gas market.

• China Gas Holdings signed a deal with Energy Transfer in June 2022 to receive 0.7 mm tonnes a year on a free-on-board basis for 25 years, beginning in 2026.

• Venture Global has about 70 MTPA of LNG export capacity in operation, construction, or development in Louisiana.

• In 2021, Venture Global signed several large deals with firms in China, which imported more LNG in that year than any other country.

GEOTHERMAL

Fervo Energy to develop geothermal + DAC facility

• Fervo Energy plans to design and engineer a geothermal and direct air capture (DAC) facility with the support of the Chan Zuckerberg Initiative (CZI).

• In a DAC facility, carbon dioxide is captured, heated, and then pumped underground, requiring a reliable source of carbon-free electricity and heat.

• Fervo’s design can provide a potential solution to the challenges of DAC, possibly lowering the cost of carbon removal.

• CZI’s funding for organizations advancing promising climate change solutions builds on its support for carbon dioxide removal.

Visual of the week

Still a ways to go to eliminate coal with coal-to-gas switching being a critical decarbonization tool for the coming decade and beyond.

That’s a wrap for today. If you like what you read, send to a friend.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.