EnLink, BKV forge CCS deal to clean Barnett Shale natural gas

BKV Corp. and EnLink Midstream are partnering on a carbon capture and sequestration arrangement to clean up the natural gas BKV produces in the Barnett Shale region of North Texas, the companies said June 9.

The companies reached a phase 1 final investment decision in a deal that will send BKV-produced gas from the Barnett Shale area to EnLink's processing plant in Bridgeport, Texas, through EnLink's pipelines.

Once at the Bridgeport plant, the CO2 waste stream will be captured, compressed, and permanently sequestered through a nearby injection well BKV owned, the companies said in a joint statement.

"This project will capture and store a significant amount of carbon dioxide emissions per year, which moves EnLink a step closer to achieving our goal of a 30% reduction in CO2e emissions intensity by 2030 over EnLink's 2020 scope 1 emissions intensity," EnLink CEO Barry Davis said.

The arrangement is expected to offset BKV's emissions by 10% in its pursuit of reaching net-zero by 2025, the company said.

The sequestration operation is expected to begin by the end of 2023. The companies did not disclose expected capture and sequestration amounts.

"This investment reinforces our commitment to leading the way in the production of net-zero green natural gas," said BKV CEO Chris Kalnin. "We look forward to being a pioneer in CCS and working with EnLink, and other like-minded companies, who are ready to address climate change head-on."

According to an analysis of the deal from Tudor, Pickering, Holt & Co., the companies' existing assets won't require too much additional spending.

"We don't expect a material equity reaction this morning as lack of detail around project scope and economics make this project difficult to capitalize today, but will be watching for additional details for additional color/announcements in the coming months, especially relating to prior [letters of intent]/partnerships along with ENLC's existing industrial-heavy Mississippi River corridor footprint," Tudor, Pickering, Holt & Co. said.

The agreement is EnLink's second carbon capture deal at its Bridgeport facility after it secured a 15-year agreement with Continental Carbonic Products to capture and sell 100,000 mt/year of CO2 beginning in 2024, the analysts said.