The Texas land grab

CARBON CAPTURE

Tailwater-backed Frontier announces carbon storage hub in Wyoming

• Frontier Carbon Solutions announces the Sweetwater Carbon Storage Hub in southwestern Wyoming.

• Alicia Summers is promoted to Chief Development Officer.

• Receives a $40 million grant from the Department of Energy for the Carbon Storage Hub.

• The Sweetwater Carbon Storage Hub will be an open-source, multipurpose carbon storage hub.

• The hub spans over 45,000 acres and aims to store over 350 million metric tons of CO2 in geologic reservoirs.

• Frontier and the University of Wyoming’s School of Energy Resources will use the grant to develop the hub.

• Frontier aims to become the premier carbon management provider in the Rockies.

• Tailwater Capital is fully committed to developing the carbon storage hub in Southwest Wyoming.

WSJ reports on oil giants bidding for pore space

• Energy giants like Oxy, Chevron, Conoco, and Exxon are engaging in a land grab to secure subsurface rights for carbon sequestration.

• They are offering significant amounts of money to lease porous rock deep underground for storing carbon dioxide (CO2).

• The goal is to inject CO2 deep underground to remove it from circulation and mitigate greenhouse gas emissions.

• Leasing activities in Texas and Louisiana for CO2 storage have covered around 480,000 acres of land, with offshore leasing in the Gulf of Mexico also expanding.

• Companies are paying signing bonuses per acre, with potential annual payments and royalties for CO2 injection rights.

• Now for the BUT…

  • Critics argue that carbon sequestration is a temporary solution that avoids more challenging decarbonization efforts.

  • Some legal and regulatory aspects, such as ownership rights and risks of leaks, remain unresolved.

  • Concerns have been raised about the safety and potential impacts of injecting large amounts of pressurized gas into the earth.

  • Projects have faced opposition, leading to proposed legislation to regulate and restrict carbon sequestration activities.

It’s no surprise these players are concentrating around the massive emitter base in Gulf of Mexico and Louisiana (who pretty much has primacy)

Aker Carbon Capture and Ørsted team up for carbon capture in Denmark

• Aker Carbon Capture and Ørsted have signed a contract for a large-scale carbon capture project in Denmark.

• Aker Carbon Capture will deliver five Just Catch units, additional equipment, and temporary CO2 storage and on-/offloading facilities.

• The contract value is expected to be over EUR 200 million.

• The carbon capture facilities will be installed at Ørsted’s wood chip-fired Asnæs Power Station and the Avedøre Power Station’s straw-fired boiler.

• The combined facilities will have a design capture capacity of 500,000 tonnes CO2 per year.

• The project is part of Ørsted’s Kalundborg Hub and aims to create the first full-scale carbon capture and storage value chain in Denmark.

• The funding from the Danish Energy Agency (DEA) will support the project, which involves Ørsted, Aker Carbon Capture, Microsoft, and Northern Lights.

OIL AND GAS

Civitas enters the Permian with $5 billion acquisition from NGP

• Civitas Resources has signed two agreements to acquire oil producing assets in the Midland and Delaware Basins.

• The acquisitions were signed with affiliates of Hibernia Energy III and Tap Rock Resources, portfolio companies of NGP Energy Capital

• The acquisitions will add approximately 68,000 net acres and increase Civitas’ production by 60%.

• The acquisitions will add about 800 gross locations with attractive returns and increase the pro forma oil-weighting to nearly 50%.

• Civitas expects to increase its dividend by about 20% in 2024 and aims to reduce leverage to less than 1x by year-end 2024.

• Civitas will acquire Tap Rock’s Delaware Basin assets for $2.45 billion and Hibernia’s Midland Basin assets for $2.25 billion.

• The financing for the transactions includes senior debt, stock issuance, credit facility borrowings, and cash-on-hand.

• Bank of America and JP Morgan are providing $3.5 billion of committed financing for the transactions.

   

The Permian arms race continues:

• Last week, Earthstone and NOG dropped $1.5bn on Encap-backed Novo

• In April, Ovintiv spent $4.3bn on 3 EnCap Permian portfolio companies

Let be real. It’s hard to find oil inventory that works in a $69.99 environment. (we’re in the $50s on an inflation-adjusted basis to 2019)

Mid caps will either sell or acquire themselves to large cap status. Once a big fish, they’ll spend a portion of their capex (albeit small) on emissions reduction and energy transition.

EMISSIONS REDUCTION

Chart and startup Kathairos partner on methane emission reduction tech

• Chart Industries and Kathairos Solutions have expanded their partnership for methane emission reduction technology.

• The partnership now includes products such as Orca™ Delivery Systems in addition to Chart’s MicroBulk tanks.

• The contract between the two companies has been extended for a minimum of two more years.

• The combined solution has helped mitigate 21.69 million standard cubic ft (SCF) of methane emissions and eliminated 20,132.55 metric tons of CO2 equivalent emissions.

• Kathairos plans to deploy tens of thousands of their proprietary nitrogen systems throughout North America to meet oil and gas industry targets for methane reduction.

• The companies anticipate an increase in demand for Kathairos services due to pending methane regulations.

• The goal is to help customers meet ambitious methane elimination targets and advance their net zero goals in the oil and gas sector.

Rebellion gets the nod from ACR for orphan well plugging

• Rebellion Energy Solutions’ methane-abatement and land-restoration project becomes the first orphan well plugging project listed by the American Carbon Registry.

• The project immediately and permanently abates approximately 74,000 metric tons CO2e by plugging methane-emitting orphan wells in an Oklahoma oilfield.

• The project aligns with key United Nations Sustainable Development Goals and mitigates legacy impacts for landowners and communities.

• Rebellion’s business model generates durable, verifiable carbon-offset credits under the American Carbon Registry framework.

• The project incorporates regenerative agriculture practices to restore the land and foster biodiversity with 5 million seeds of 21 native forbs and grass species have been planted, along with 4,000 native plant plugs.

QUOTE OF THE WEEK

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.