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Kinder Morgan urges new tax credits as midstream firms embrace carbon capture

Kinder Morgan Inc. CEO Steven Kean called for additional federal policy incentives to build out CO2 pipeline infrastructure as more North American midstream companies announced carbon capture, utilization and sequestration initiatives.

Extended Tax Code Section 45Q credits are offered to industrial manufacturers that capture carbon emissions and either store them permanently or put them to use in applications that reduce life cycle emissions. U.S. President Joe Biden's administration plans to make the credits more accessible to developers, but Kean warned that converting existing pipelines to transport CO2 will not be viable without new subsidies.

"You really do need to move this stuff in liquid form, which means ... very high-pressure pipe," the CEO said June 2 during a conference hosted by Sanford C. Bernstein & Co. LLC. "If you think about [natural] gas and liquids pipelines running at 800 to 1,000 psi, call it — there's various newer pipelines at 1,440 or something like that — but you need to move the CO2 in liquid format, call it 2,000 psi. You can't just simply retrofit."

Kean did acknowledge that "there may be some solutions around that by doing the compression and liquefaction at the other end of the pipe." The Kinder Morgan CEO said in April that the gas pipeline giant would consider bringing in joint venture partners as it seeks to expand beyond sequestration and pipeline transportation to carbon capture.

On June 3, EnLink Midstream LLC announced that it formed a new group focused on energy transition opportunities to identify carbon capture, use and sequestration synergies that are in line with the company's Louisiana footprint.

"We are uniquely positioned to launch [carbon capture, use and sequestration] ventures that will move EnLink and our industrial partners toward mutually beneficial decarbonization goals that support the global energy transition, while also driving value creation for EnLink and our unitholders," Chairman and CEO Barry Davis said about the group, called EnLink Carbon Solutions.

The firm in May said it intends to reach net-zero greenhouse gas emissions by 2050, aiming for a 30% reduction in methane emissions intensity by 2024 versus 2020 levels and a 30% reduction in its total CO2 emissions intensity by 2030 versus 2020 levels.

In Canada, Pembina Pipeline Corp. is also exploring the carbon capture value chain. President, CEO and Director Michael Dilger noted during a June 1 conference call that the company is doing a pilot project at its Redwater storage and fractionation complex in Alberta.

On the LNG side, Venture Global LNG announced May 27 that it launched a carbon capture and sequestration project. The project would compress CO2 at its under-construction Calcasieu Pass and proposed Plaquemines LNG export facilities south of New Orleans, La., then transport the CO2 and inject it deep into subsurface saline aquifers, where it would be permanently stored. A Venture Global statement provided few details beyond the relatively small amount of emissions that the project would be designed to capture — 500,000 tons of carbon per year from Calcasieu Pass and Plaquemines. The company said it expected to use similar infrastructure to capture and sequester 500,000 tons of carbon per year from CP2, an LNG project that Venture Global has proposed to build adjacent to Calcasieu Pass.