California Resources Corporation (CRC) and its carbon management business Carbon TerraVault (CTV) have approved the Golden State’s first carbon capture and storage (CCS) project, at CRC’s Elk Hills cryogenic gas plant in Kern County, California, with first injections scheduled for late 2025.
Project approval follows CRC’s recent receipt of final Class VI well permits from the Environmental Protection Agency (EPA) for underground injection and storage of carbon dioxide (CO2) into the 26R reservoir, which is part of CTV’s joint venture with Brookfield.
26R is one of two depleted oil and natural gas reservoirs that comprise the CTV I storage site, with an expected injection rate of 1.46 million metric tonnes of CO2 storage per annum. Total estimated capacity of 26R is up to 38 million metric tonnes.
CRC’s internal rate of return from the CCS project is expected to be at the high-end of its previously disclosed range of 10%-30%.
California Natural Resources Secretary Wade Crowfoot said the project represents another step forward in California’s pathway to combat climate change and achieve carbon neutrality over the next two decades.
“While slashing carbon pollution is the main thrust of our climate programmes, capturing and removing carbon from our atmosphere is also essential to meeting our carbon targets,” he said.
“This project, which repurposes fossil fuel extraction infrastructure and expertise to sequester carbon, is a forward-looking way to remove emissions while creating jobs in an emerging sector. Simply put, getting projects like this operating in a safe and effective way is critical for our climate progress.”
Natalie Adomait, Managing Partner at Brookfield, said the announcement reaffirms its commitment to collaborating with the right partners on economically viable energy solutions that advance the transition to Net Zero. “Together with CRC, we are deploying our clean energy expertise to accelerate decarbonisation and drive capital deployment across California’s critical industries,” she said.
Cryogenic gas plant CCS project highlights
- Capture and Sequestration: CRC plans to capture and, through its joint venture with Brookfield (CTV JV), permanently store up to 100 thousand metric tons (KMTPA) of CO2 per annum from its Elk Hills cryogenic gas plant in the 26R reservoir.
- First Injection: Operations are expected to commence in late 2025.
- Capture Incentives and Revenue Equivalents: CRC is expected to qualify for $85 per metric tonne in 45Q tax credits, with potential for Low Carbon Fuel Standard (LCFS) credit generation and reduction in Cap-and-Trade (C&T) liabilities pending California Air Resources Board (CARB) rulemaking. Decarbonised gas throughput is projected to increase propane recovery by up to 100 barrels of natural gas liquids per day.
- Operating Costs: The project’s proximity to CRC’s 26R reservoir will minimise transportation costs associated with sequestration.
- Operating Profitability: Through this project, CTV JV is projected to generate EBITDA of $50-$60 per metric tonnes in sequestration fees paid by CRC, consistent with the economic type curve for CTV storage-only projects.
- Capture Capital Investment: CRC’s capture project capital spending is estimated at $14-18m.
- Reduced GHG Emissions: The project is expected to lower Scope 1 and 2 emissions from the Elk Hills Power Plant by up to 7%.
