ExxonMobil eager for US government to finalise rules on offshore carbon capture and storage

An ExxonMobil executive has reiterated that the US should be taking a global leadership role in carbon capture and storage solutions, and is hopeful that a much-needed regulatory framework for offshore CCS will be released soon.

Erik Oswald, ExxonMobil’s vice president for advocacy and policy development within the company’s Low Carbon Solutions division, told delegates at the Offshore Technology Conference in Houston that the US Department of Interior is working on an offshore CCS regulatory framework, and there is some optimism that results could be presented by the end of 2024.

Oswald said it was a big task for the department to create the framework “and I know they are working hard on it”.

The Interior Department's Bureau of Ocean Energy Management (BOEM) expects carbon sequestration rulemaking documents to be ready for public comment later this year, BOEM’s chief of the Strategic Resources Program, Megan Carr, told attendees in March at Upstream’s Future Energy Forum in Houston.

BOEM and the Bureau of Safety & Environmental Enforcement (BSEE) are working together to draft regulations for public comment, Carr said.

Rulemaking documents for US carbon sequestration projects were under review by government lawyers and are likely to be available for public comment in the late autumn, Carr said at the Upstream event in March.

It is understood the department was supposed to have delivered the framework for permitting CCS projects in federal waters long ago.

ExxonMobil is one of many companies with ambitious offshore CCS plans, but the lack of a regulatory framework is one of several challenges that are being worked through in parallel.

Oswald said the US is probably still five years away from a fully-functional leasing programme for CCS.

“The great challenge with CCS is you've got to work the cost down and really the biggest tools we have for that are technology” while it was also essential to build scale into CCS projects.

The capture component of CCS is the most expensive, and there are challenges with storage, so the key — especially on the US Gulf Coast where ExxonMobil has major CCS ambitions — is to build on a large scale.

Oswald emphasised that ExxonMobil is committed to CCS, and that the Inflation Reduction Act provides the incentive of a tax credit of $85 per tonne of stored carbon dioxide.

CCS is the main component of ExxonMobil’s Low Carbon Solutions business, followed by hydrogen, biofuels and lithium, all of which are supported by the company’s upstream skillset.

The company’s $4.9 billion acquisition in 2023 of compatriot Denbury — an experienced developer of carbon capture, utilisation and storage solutions and enhanced oil recovery — was a major play for its low-carbon solutions business.

In February, ExxonMobil chief executive Darren Woods said the company had recently completed the construction of a pilot plant “to further develop a unique, proprietary technology, which has the potential to significantly lower the cost of direct air capture”.

He emphasised that the company is pursuing more than $20 billion of lower emissions opportunities, evenly split between reducing its own emissions and reducing third-party emissions.

If the Interior Department’s new rules take too long, the US could miss out on the “international battle for capital” for CCS projects, said Erik Milito, president of the National Ocean Industries Association.

He argued that other countries — such as Singapore, Thailand, Australia and Japan, among others — are already moving forward with CCS projects because they have their own regulatory frameworks in place.

“We're very behind, and we need to get off our policy butts and get moving to make sure we can do it here,” Milito said at an OTC session.

Milito also warned that the proposed rule, when it finally comes out, could be thousands of pages long.

“Those rules are going to make or break our industry,” he said.