Talos Energy carbon storage project gets lift with lease award for Texas offshore site

Independent upstream oil and gas producer Talos Energy and a partner are advancing a carbon sequestration and storage project after winning a bid for the rights to lease an offshore Gulf of Mexico site that straddles the Texas and Louisiana coastlines.

The site in Texas state waters is near a large number of refining and LNG facilities that are emitters of CO2.

Talos' progress, disclosed in a statement Aug. 25, follow a separate joint-venture it announced in June with a European company to develop carbon capture and storage project opportunities along the US Gulf Coast, including in state and federal waters offshore Texas, Louisiana, Mississippi and Alabama.

The efforts are part of a wave of similar initiatives that have been proposed or are being considered by North American companies that process shale oil and gas or use it as a feedstock to produce LNG, generate electricity, or refine into gasoline or other byproducts.

Amid the energy transition toward greater use of clean-burning fuels, the technology underpinning these projects is increasingly being embraced as a way to preserve fossil fuel production even as questions remain about costs, government tax incentives and the level of private investment.

In a statement, Talos said that it and a partner, Carbonvert, won a bid from the Texas General Land Office for a carbon storage site in territorial waters of Jefferson County, near Beaumont and Port Arthur. The partners will enter into exclusive negotiations with Texas officials over a formal lease agreement, the statement said. Talos said the award places it among a select group of US independent energy companies with access to a physical site for such a project.

Based on preliminary calculations, Talos, which would be the site operator, expects it can ultimately sequester approximately 225 million mt to 275 million mt of CO2 from industrial sources in the area.

The startup Carbonvert was formed in late 2020 by a group of energy sector veterans with experience in large-scale carbon capture and storage projects, including the 71-MW Petra Nova power generation unit near Houston that was designed to capture CO2 to be transported through pipelines to mature oil wells.

Petra Nova was mothballed, after initially halting operations last year due to low oil prices driven by the coronavirus pandemic. While oil prices have since rebounded, the future of the unit ---- the only commercially operational carbon capture project attached to a coal plant in the US -- is uncertain.

In July, Warren Buffett's Berkshire Hathaway, a major investor in US energy infrastructure and operator of the Cove Point LNG export terminal in Maryland, said it supported an industry push for passage of new legislation that would provide additional tax incentives for clean energy projects.