Carbon capture and storage (CCS) is critical for reducing CO2 emissions from oil and gas combustion. Energy giants Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) see CCS as an environmental necessity and lucrative opportunity. Exxon believes CCS could be a $4 trillion global market by 2050.
Chevron’s Growing CCS Portfolio
Chevron is expanding its CCS capabilities worldwide:
- It won a permit for a potential CCS hub in offshore Western Australia. Chevron has 70% in a joint venture with Woodside Energy (30%).
- Chevron will farm down 5% equity to Korea’s GS Caltex. The partners have complementary assets for CCS development.
- This builds on Chevron’s Gorgon CCS in Australia, enabling emissions reduction and customer carbon storage.
- Chevron is developing the large Bayou Bend CCS Hub in the U.S. with over 1 billion metric tons of CO2 storage capacity.
- Chevron targets capturing 25 million metric tons of CO2 annually by 2030, equal to removing 5 million cars yearly. Most of its CCS projects beyond Gorgon are early-stage.
ExxonMobil’s Unique CCS Strategy
ExxonMobil has a different CCS approach than Chevron:
- While developing CCS for its emissions, Exxon focuses heavily on providing CO2 transportation and storage for third parties.
- Exxon signed a deal with CF Industries to store up to 500,000 tons of CO2 yearly from its Mississippi facility, halving site emissions.
- This is Exxon’s second CF contract. It has deals to store 5.5 million tons of CO2 annually for multiple customers, equal to replacing 2 million gas cars with EVs.
- No company has signed as many or large commercial CCS contracts as Exxon. Its $5 billion Denbury Resources acquisition in 2023 expanded its CO2 transportation infrastructure.
- Exxon expects billions in stable annual revenue from CCS within five years, providing an earnings floor.
The Bottom Line
Carbon capture and storage is essential for net-zero emissions. Chevron and ExxonMobil are CCS leaders. Exxon has made more commercial progress, especially with third parties. Chevron methodically builds a global CCS portfolio to seize this massive potential market. Scaling commercial CCS could significantly drive long-term shareholder value for these energy giants.
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