Local oil producer California Resources Corp. reported this week it has applied for a federal permit to capture and bury up to 10 million metric tons of carbon dioxide in a depleted oil and gas reservoir in the Elk Hills area near Tupman.
Potentially leapfrogging its earlier proposal to capture and use carbon dioxide coming off the smokestack of a power plant it owns in Elk Hills, CRC said the new proposal could begin underground injection of about 1 million metric tons per year of carbon dioxide — 2.2 billion pounds, or roughly equivalent to the annual emissions of about 200,000 passenger vehicles — within four years.
By October the company plans to apply for another permit with the U.S. Environmental Protection Agency to operate a similar carbon capture and sequestration facility nearby that would raise the project's capacity to 40 million metric tons.
The combined project, dubbed Carbon TerraVault I, could become the first to tap what scientists see as Kern County's vast potential to suck greenhouse gases out of the atmosphere and permanently store it underground as a means of slowing climate change.
Locally there has been talk of putting the county's industrial expertise to use in managing CCS projects, which are seen as expensive and energy-intensive. So far, CRC is the only local company that has publicly proposed such a project.
"CRC is proud to be a first mover of CCS (carbon capture and sequestration) operations in California and to help the state make progress on its carbon neutrality goals," the Santa Clarita-based company said in an earnings news release Thursday.
A spokeswoman for the California Energy Commission said Friday that officials at the state Department of Conservation were aware of the project but that neither agency would have a formal role in its review or approval. She noted a multi-agency group is studying CCS and that it may come up during the California Air Resources Board's upcoming climate-change scoping plan update process.
CRC President and CEO Mark A. "Mac" McFarland said during an earnings call Thursday that the company has not yet settled on how it would source the carbon, capture or transport carbon at the facility. But he said data, studies and analysis support the project's feasibility, and he laid out a partial financial case for the project.
California's Low Carbon Fuel Standard could be counted on to provide about $200 per sequestered ton of carbon, McFarland said. That doesn't include what he said is a federal tax credit amounting to $50 per ton, for annual revenues and savings of about $250 million at TerraVault I. He did not provide an estimate of what it might cost to build or operate the facility.
CRC has a key advantage over its competitors in the emerging field of CCS, he told analysts, in that the company owns depleted petroleum reservoirs where the carbon would be stored. Anyone else trying to buy such a reservoir would have to spend one to two years doing so. Plus, competitors in other states wouldn't have access to revenue from California's LCFS program, McFarland added.
Carbon TerraVault I would not necessarily stop CRC from moving forward with its earlier proposal to remove carbon dioxide from the emissions stream of its 550-megawatt Elk Hills Power Plant. But McFarland characterized that earlier project, dubbed CalCapture, as more complicated. He emphasized CalCapture remains under evaluation by the company.
CalCapture would put carbon dioxide to use in helping CRC produce oil at Elk Hills because the soda gas makes crude less viscous and easier to extract.
"We continue to advance the CalCapture project, but it has a different set of economics than the CCS project we have," he said.
In January 2020, scientists at Lawrence Livermore National Laboratory released a study concluding California can achieve its aggressive climate goal by burying or offsetting 125 megatons per year of carbon dioxide. It specifically mentioned Kern County oil formations' massive geologic capacity for permanently storing carbon dioxide.
