CRC Plans to Store Carbon

 California Resources Corp. has embarked on an ambitious project to capture carbon dioxide and inject it into underground storage sites.

Called Carbon TerraVault, the new business line for the Santa Clarita oil and natural gas producer will help the state of California meet its decarbonization goals of a 40 percent reduction in CO2 emissions by 2030, carbon neutrality by 2045 and negative emissions thereafter.

Chris Gould, chief sustainability officer for the company, said that with Cal Resources’ core competencies, skills and assets in the form of depleted oil and gas reservoirs, it believes that it has an opportunity with Carbon TerraVault to be a leader in the energy transition that California is undertaking.

“That is the crux of the opportunity and the motivation – the decarbonization of California, achieve its goals and bring to bear California Resources’ critical skills and assets to that cause,” Gould said. 

In addition to Carbon TerraVault, the company is undertaking another carbon capture, utilization and storage (CCUS) project called CalCapture. This project will take emissions from the Elk Hill Power Plant in Kern County and inject it into oil reserves to bring the oil to the surface. The emissions then stay underground. 

“We have estimates of 60 million barrels of oil from CO2 enhanced recovery, over a period of 15 to 20 years,” Gould said. 

“This process cuts in half the lifecycle greenhouse gas emissions of the oil produced at our Elk Hills Field, which is already among the lowest in the state, and puts the Elk Hills Power Plant on a path toward becoming a carbon neutral source of base-load electricity for California,” the company said. 

By recovering the oil, it is further depleting the reservoir that can then be repurposed as storage for CO2, Gould added.

In other words, Gould continued, the company is creating more floor space that can be utilized for permanent storage of carbon and gives both a lower carbon intensity oil for use in California and the opportunity for third-party emitters to have storage for their CO2. 

“We kind of get two for one, if you will,” Gould said. 

The difference between Carbon TerraVault and CalCapture is in the source of the carbon dioxide to be stored, or sequestered, underground.

For Carbon TerraVault, the source of the CO2 is from third-party providers that are among the hardest to decarbonize. Think power plants, oil refineries, cement plants and similar facilities. 

Costs unknown

The cost to Cal Resources for both projects remains unknown,

“In terms of CalCapture, we are in the early stages of doing the engineering and design,” Gould said. “So we don’t have an estimate as of yet to give around the investment cost.”

For Carbon TerraVault projects, the average the capital requirement would be around $50 million for every factory or refinery that used the system. If the source of the CO2 already has capture technology, then Cal Resources will not need to invest to set up that process, he said. 

There are other variables as well that play into how much the company will invest – the nature of the emitter, the concentration of the CO2 from the emission source and the proximity to the storage. 

“If a project happens to be close to a storage reservoir, we will have minimal capital cost with transporting,” Gould added. “There are a variety of factors that go into the cost depending on the emitter.”

The state has incentive policies in place that will make the carbon capture projects economical, Gould continued. 

Carbon TerraVault and CalCapture are both eligible to take advantage of the Low Carbon Fuel Standard program as well as potential future allowances under California’s Cap & Trade program. The projects are also eligible for the federal 45Q tax credit.

“In 2022, (the Department of Energy) is expected to award funding of up to $20 billon for decarbonization projects and we expect (California Resources) could apply for this or other project financing options,” Gould said. 

Cal Resources shareholders support the carbon capture projects, too, for various reasons, he added. 

“First and foremost is (Cal Resource’s) commitment to the transition in the energy sector, expanding its ESG (environmental, social, and governance) leadership through decarbonization and low carbon initiatives, and providing real solutions for reaching and maintaining carbon neutrality to help California meet its emissions reduction goals,” Gould said. 

The timeline for Carbon TerraVault is to be ready to start injecting 1 million tons of carbon dioxide in 2025, and then build up to 5 million tons of the greenhouse gas a year by 2027. 

First in California

Lee Beck, international director of carbon capture at the Clean Air Task Force, a Boston advocacy group for clean technology, said it was critical to have plans to decarbonize those hard-to-reach industries.

“Carbon capture is one of the options to do so and it is really pressing to commercialize the technology,” Beck said. 

CalCapture, on the other hand, will get its CO2 from the Cal Resources-owned Elk Hills Power Plant. The 550-megawatt, natural gas-fired plant provides enough electricity to the grid to supply power to 300,000 homes. 

Cal Resources would be the first company to create a carbon capture and storage project in California.

It has applied for two permits from the state to do the Carbon TerraVault project on sites at the Elk Hills power plant and is currently working through a front end engineering and design process on the CalCapture project at Elk Hills. 

“We are evaluating the economics of the plant in light of the incentives that are available,” Gould said. 

Ben Grove, a staff geoscientist at the Clean Air Task Force, said that the U.S. Department of Energy is supporting Cal Resources in its carbon capture projects. 

“The challenge will be in navigating the permitting and regulatory landscapes of these large scale CCS projects and getting them operational,” Grove said.

The Energy Department provided financial assistance to Cal Resources for the engineering and design of the CalCapture project. The company also partnered with the climate investment arm of the Oil and Gas Climate Initiative to form a joint venture, Elk Hills Carbon LLC that will do the project. OGCI Climate Investments has invested in Elk Hills Carbon and will provide technical input into the project.

Cal Resources has identified 1 billion metric tons of permanent CO2 storage capacity in California. 

Gould said that that is a significant amount of storage relative to the needs of California for carbon capture and storage in order to meet its goals.

For the first Carbon TerraVault project, the company estimates the capacity to be up to 40 million metric tons out of the 1 billion that it has identified for storage, Gould said. 

“(CO2) will be injected at a rate of 1 million metric tons per year which is the equivalent of the annual emissions of approximately 200,000 passenger vehicles,” he added. 

The California Energy Commission called the Elk Hill Field “one of the premier CO2 enhanced oil recovery and sequestration sites in the U.S. … an optimal site for the safe and secure sequestration of CO2.”

Grove, of the Clean Air Task Force, said the geology of the Central Valley is very amendable to CO2 storage. 

“From an operational standpoint, it is not going to be difficult to find a storage site where the CO2 can be injected and it may be (easy) to find the geology to secure and store the carbon dioxide in deep geological locations,” he said. 

The Department of Energy estimates that California has 34 billion metric tons to 424 billion metric tons of total storage capacity available to it for carbon capture. 

Impermeable rock

How sequestration works for Carbon TerraVault is rather simple to describe. 

The source of the CO2 is retrofitted with a capture technology at the end of the flue stack where the emissions come out. Up to 95 percent of the emissions are captured and then concentrated so that it can be transported via pipeline or, in some cases, directly injected into a reservoir. 

The gas is stored in underground rock formations that are at a depth of more than a mile from the surface, Gould said. 

“They are formations that are capable of permanently storing CO2 because they are capped with thick, impermeable rock,” he added. “That permanent storage is assured through long-term monitoring and oversight by local, state and federal regulatory agencies.”

CalCapture works in a similar way except that it would capture the CO2 off Cal Resource’s power plant. The storage would be similar with the difference being that it would involve the recovery of the remaining oil in the reservoir, Gould said. 

“Because we would be sequestering CO2 in the process of recovering the oil, that would lower the carbon intensity for the oil produced,” he added.