ExxonMobil, Nucor Ink Big Carbon Capture Deal

ExxonMobil
XOM
, the largest U.S. domestic oil and gas company, and big steel-maker Nucor
NUE
announced an agreement Thursday in which Exxon will capture carbon emissions from Nucor’s direct reduced iron (DRI) plant in Convent, Louisiana and permanently store it in underground reservoirs. For ExxonMobil, the deal is its third major carbon capture and storage (CCS) project announced in the last seven months as it advances its strategy for growing a portfolio of such projects along the Texas and Louisiana Gulf Coast.

“Our agreement with Nucor is the latest example of how we’re delivering on our mission to help accelerate the world’s path to net zero and build a compelling new business,” Dan Ammann, president of ExxonMobil Low Carbon Solutions (LCS), said in the company’s release. “Momentum is building as customers recognize our ability to solve emission challenges at scale.”

Combined with Exxon’s previously-announced CCS agreements with CF Industries and Linde, the deal with Nucor will, when operational, enable the company’s Low Carbon Solutions business unit to transport and store 5 million metric tons per year (MTA) for third-party customers.

In an interview Thursday morning, Ammann pointed out that that magnitude of emissions is “the equivalent of changing 2 million gas powered cars to EVs, and that’s the total number of EVs that have been sold in the United States. That’s with just three projects across these heavy industries.”

ExxonMobil’s release notes that emissions captured at the Nucor site will flow into the same infrastructure to be used for the nearby project with fertilizer company CF Industries. Asked about the extent of new infrastructure, such as pipelines, that would have to be constructed related to the Nucor project, Ammann replied “It will be quite limited, since the Nucor facility is geographically quite close to the CF Industries site.”

Ammann emphasizes that this aspect of the Nucor and CF Industries project means his LCS unit is already taking advantage of one of its most important goals in advancing its CCS business. “What’s interesting is that, with just two projects in Louisiana, we are already reaching the point at which the infrastructure at one site supports another,” he says. “So, we’re already getting to the types of economies of scale that we think will be not only helpful, but necessary to support the scaling-up of these kinds of projects, as opposed to just doing everything on a one-off basis.”

As I’ve written here previously, the growing roster of companies involved in the CCS sector in the United States recognizes the richness of the Texas/Louisiana region in terms of advantages for mounting these kinds of projects. Both states are rich in underground storage pore space, rich in the necessary infrastructure, rich in the kinds of human expertise required to manage such projects, and, of course, richer than any other region of North America in the number and scale of industrial emitters. Combine all of those advantages with state governments that are willing to not just allow but encourage these kinds of projects, and you have an ideal situation.

In our interview, though, I noted that critics of CCS continue to promote a narrative claiming that, despite having been in practice in the U.S. across decades now, the ability for industrial-based CCS to make a big difference in advancing net-zero ambitions is limited and unproven. I asked Ammann to address that criticism.

“If you look at where the world is today and where we are with the energy transition and the path to net zero – which is not very far along – and how much work we have left to do…we need all of the above,” he says. “We need everything, and we need it now, and we need it at large scale. To me, debating whether it is this or that or the other thing is really the wrong discussion. The real discussion is, where are the projects, when are they going into execution, and what kind of impact are the going to have? That’s why we’re so focused on getting real world projects signed up with real large scale emitters.

“So, of course we should be pursuing these kinds of projects. They can have a very significant, positive impact on a very capital efficient basis.”

As the biggest player operating in such a target-rich environment, we can expect many future announcements of similar projects by ExxonMobil in the years to come.