Exxon’s (XOM) Carbon Capture Project Stalled in Climate Change Setback

Elk and pronghorn antelope migrate each fall through southern Wyoming, where the sparsely vegetated landscape slowly gives way to the foothills of the Rocky Mountains. Interrupting this serene vista is a dense web of steel pipes, tanks, and pumps owned by Exxon Mobil Corp. The industrial complex provides a clue about what lies beneath: an ancient sea of coral and marine life, petrified by time and pressure into a thick layer of rock. Known as the Madison formation, this geologic structure is miles wide and reaches more than 10 Empire State Buildings below the ground. It contains natural gas, helium, and carbon dioxide. Two of these gases are consistently valuable to Exxon’s business. The third is not—and that’s a problem for everyone on the planet.

For three decades, the American oil titan has been pumping up these gases, separating them, selling some, and dumping the remainder into the atmosphere. Exxon produces more CO₂ than it can sell or use, so the company lets a lot float away—as much as 300,000 cars’ worth of emissions a year. Exxon was set to embark on a project to do the reverse: pump the unwanted gas back down where it came from. The plan was technically and strategically straightforward. By capturing CO₂, transporting it to an injection site, and burying it, Exxon would have locked away enough of the planet-warming gas to almost eliminate the climate harm caused by the facility. The captured carbon may not have made much money for Exxon on its own, but a recent change to the U.S. tax code would help overcome that hurdle with lucrative credits for safe storage. The company put the total cost of construction at about $260 million, 1% of its capital budget for 2020.

The world’s existing carbon-capture facilities can zero out just 0.1% of all global emissions

LaBarge, as the gas operation is known, would have become one of the world’s foremost examples of carbon capture and sequestration (CCS), a technology most climate-modeling experts view as essential to slowing down global warming and, eventually, reversing it. The project would also help Exxon clean up its image as one of the foremost corporate climate polluters.

Construction was set to begin over the summer. But in April, Exxon told Wyoming officials that the project would be delayed indefinitely, because of fallout from Covid-19. The company’s share price at one point during the pandemic dropped to an 18-year low, as oil prices cratered, throwing many plans across the industry for this year and beyond into turmoil.

Some traditional oil and gas projects are continuing. In September, for example, Exxon announced plans to expand crude operations off the coast of Guyana at a cost of $9 billion—35 times the cost of implementing CCS at LaBarge. Guyana is just one of the growth projects that would have fueled a sharp increase in the company’s carbon emissions, according to internal projections from before the pandemic reviewed by Bloomberg Green. If LaBarge had gone ahead, on the other hand, it would have been one of the largest carbon-capture projects operated solely by Exxon, making up almost 20% of the company’s new emission-reduction efforts out to 2025, according to the documents.

LaBarge “remains in our capital plans, and the permitting process and necessary design work continue,” says Exxon spokesman Casey Norton. Spending cuts “have impacted projects across all business lines.” Exxon has said estimates in the planning documents are preliminary and do not include additional measures to cut emissions.

The decision to pause things in Wyoming won’t stop development of CCS, but it will slow down worldwide deployment. There are now 26 large-scale carbon-capture projects, according to the Global CCS Institute. Exxon also has a stake in a large facility in Australia as well as others in Qatar and the Netherlands, and Norton says the company has “expanded our interest in carbon capture significantly” over the past two years.

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