Give Tim Duncan credit: At a time when many smaller energy companies were struggling to cope with Covid-19 fallout and oil price crash, the Talos Energy chief executive and his team were thinking far ahead, sizing up new opportunities beyond upstream oil and gas.
“We knew we were going to make it through the pandemic, but we were trying to figure out how to redefine ourselves coming out,” Duncan says.
We had to take some risk, and we had to show a little courage and lean in on an idea, hoping, frankly, that eventually others would too.
“We had to take some risk, and we had to show a little courage and lean in on an idea, hoping, frankly, that eventually others would too.”
Talos quickly become an enthusiastic developer of carbon capture and sequestration projects and is adapting its subsurface expertise to offer CCS services to industrial emitters, no shortage of which exist near the Houston-based company’s home turf.
Building the business during the pandemic — and before the passage of the Inflation Reduction Act, which increased support for CCS — was a risky move. But environmental, social and governance investments and lower-carbon demands were increasing, and Duncan saw CCS as a way to make his smaller company more relevant in the changing environment.
Last year, Talos forged strategic partnerships with UK-based Storegga, Houston’s Carbonvert and US supermajor Chevron to develop the 10 million tonnes per annum Bayou Bend offshore CCS hub on the US Gulf Coast.
The idea sprang from a Talos committee that noted the company’s existing seismic data and operational experience could be applied to carbon sequestration.
“We’re a firm built on geology. We’re a firm built on technology and operations, specifically along the Gulf Coast and offshore. Clearly, with CCS, there’s a lot that’s transferable,” Duncan tells Upstream.

Head start
Bayou Bend — the first offshore CCS project in the US, with a total expected capacity of 225 million to 275 million tonnes of carbon dioxide storage — was the first CCS project Talos could bid for without a large financial commitment up front, Duncan says. The company already had in-house seismic data for the lease, where it once drilled a dry hole.
Talos began acquiring rights to “pore space”, areas with soil or rock porous enough for CO2 injection and storage, and now has four CCS projects in its sights: Bayou Bend, offshore the east Texas city of Port Arthur; Coastal Bend in Corpus Christi, Texas; River Bend, on the Mississippi River industrial corridor in neighbouring Louisiana; and a CCS project for the Freeport LNG site south of Houston. Duncan is an entrepreneur in upstream oil and gas. Before co-founding Talos, he helped create Phoenix Exploration, which was later sold to a group of buyers led by Apache.
He also managed reservoir engineering and evaluations for another Gulf of Mexico start-up, Gryphon Exploration, in the early 2000s, which ultimately was sold to Woodside.
In addition to preparing the pore space for subsurface sequestration, Talos is working with industrial emitters to line up CO2 supplies.
“Our job is to be ready when they’re ready,” Duncan says.
The process involves a lot of co-ordination: “We’ve got to first secure the land. Then we’ll drill a stratigraphic test and really describe the geology so we can put in a permit,” he says.
“While we’re doing that, we’re doing engineering design work on the infrastructure required on the transportation, injection and monitoring to make this work.
“There’s a series of workstreams, and we have to stage-in investments and understand where to take capital risk before we have a signed-up customer, to make sure we’re ready when, ultimately, they’re ready for us to take custody of the product.”
Talos’ CCS ventures come as the oil and gas industry grapples with how to reduce its greenhouse gas emissions — and more vexing, perhaps, those of the users of its products, the so-called “Scope 3” emissions.
Widening scope
Five years ago, Duncan says, Scope 3 emissions were hardly on the company’s radar. “Now we find ourselves helping and trying to be a part of the solution, to help do something about it,” he says.
As Talos’ plans for CCS took shape, Duncan got in touch with Storegga, lead developer of the Acorn CCS project in Scotland. He knew Storegga’s founder, Nick Cooper, from years in the oil and gas industry, and trusted that Cooper wouldn’t “throw his weight” behind something with little chance of success.
“So I called him and said, ‘tell me how this works’,” Duncan recalls.
Talos and Storegga subsequently established a partnership to explore CCS potential on the US Gulf Coast, the first in a series of partnerships that, as with traditional oil and gas joint ventures, smaller companies may form for capital-intensive projects.
Duncan says: “We can go lease something at a high working interest in deep water, but depending on the total project costs, we may not want 75% of it, we may not want 100% of it. It might make more sense to have 25% to 30% of it. We’ll ultimately have to make similar capital allocation decisions here [with CCS].”
Talos has set up the CCS business as an unrestricted subsidiary, wholly owned by Talos but separate from its oil and gas business.
This allows it the option to bring in a financial partner while keeping the business under the Talos umbrella, or to spin it out as another entity.
“We’ve structured it for maximum flexibility,” he notes.
Flexibility has been key since Talos began its CCS journey.
“We’re very proud of the role we’re playing to reposition who we are as an energy company, particularly one who’s trying to be a larger company that participates in the entire energy ecosystem and be around for a long time,” Duncan says.