The pipeline team attempts to transform through carbon capture

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Oil and gas industry update

The U.S. oil and gas pipeline industry is looking for new opportunities to lay steel underground and pipe the carbon dioxide produced by burning fossil fuels.

The midstream energy sector clashed with climate activists who opposed the use of pipeline projects as infrastructure to lock in greenhouse gas emissions. Wall Street is pushing the industry to show how it will adapt to the needs of a low-carbon world.

In response, the pipeline operator pointed out their potential as a link Carbon capture and storage (CCS) systems in which carbon dioxide emissions are trapped in underground reservoirs, where they can stay away from the atmosphere. The pipeline will transport carbon dioxide from the industrial flue to the reservoir.

“Without fairly extensive carbon capture and storage, it is difficult to see how the climate goals are achieved,” Steven Keane, CEO of Kinder Morgan, one of the largest pipeline companies in the United States, told analysts recently. “We think we have mastered the expertise in pipelines.”

The United States already has approximately 5,150 miles (8,300 kilometers) of carbon dioxide pipelines. Compared with the national oil and gas pipeline network, the network is small, but it is the largest in the world.

They mostly gather in Permian Basin In oil fields in western Texas, carbon dioxide is injected into wells to squeeze out stubborn crude oil deposits.Income comes from selling natural gas and applying for federal Tax credit Every ton of carbon underground is worth $35.

But future growth depends on wider deployment. In some cases, pipelines will discharge carbon dioxide from emission sources such as power plants, cement plants, and oil and biofuel refineries to underground locations hundreds of miles away.

François Poirier, CEO of pipeline company TC Energy, recently told analysts that the “fundamental aspect” of the CCS industry is “the ability to store and transport molecules, which is of course our core business.” TC Energy is best known for developing existing cancel Trapezoid XL Crude oil pipeline, the goal of environmentalists.

The potential business opportunities are huge. A July report from the Biden Government’s Environmental Quality Committee stated that the scale of the CCS industry is sufficient to help realize the country’s “Net zero“Emissions by 2050 may require 68,000 miles of new carbon dioxide pipelines at a cost of up to 230 billion U.S. dollars. This is roughly the same as the mileage of liquid fuel pipelines built in the United States since 2000, which is a booming period for the petroleum industry.

Carbon dioxide pipelines require thicker walls than typical oil and natural gas pipelines to transport condensed liquefied gas under heavy pressure, which limits the prospects for low-cost retrofitting of existing infrastructure.

Al Monaco, the chief executive of Enbridge, a Canadian pipeline company with large U.S. assets, told analysts last month: “The capital will be large and it is clear that existing infrastructure players like us will be involved.”

The midstream industry is under tremendous pressure and needs to prove that it can survive the transition to cleaner fuels. The Alertian MLP index, which tracks the share of pipeline partners, has fallen by approximately 43% in the past five years. During the same period, the broader U.S. stock market more than doubled.

Alerian MLP index value line chart, $/share shows Midstream stock price decline

There have been false dawns in carbon capture before, mainly because new projects failed to make money due to high costs and lack of financial incentives to capture carbon (such as carbon prices).

But many people are seeing a shift in trends in Washington, where carbon capture is one of the rare projects on President Joe Biden’s climate agenda that has received broad bipartisan support.

Last December Comprehensive Expenses Act In the next few years, at least US$6 billion will be provided to the industry. The infrastructure package currently being passed by Congress can provide government-backed low-interest loans for carbon capture infrastructure and speed up the approval of new projects.

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Jesse Arenivas, head of energy transition venture capital at Kinder Morgan, told the Financial Times: “The real gear here today is economics.” “I think policy support is coming.”

Fund manager BlackRock and U.S. refiner Valero are supporting a company called Navigator CO2 Ventures, which has proposed a 1,200-mile pipeline system to collect gas from industrial plants such as ethanol refineries and then ship it to a company in Illinois. In underground locations, up to 12 million tons are quarantined a year.

Many environmentalists see CCS as a hoax from the fossil fuel industry and distract attention from expanding renewable energy and other zero-carbon technologies. The failure of high-profile projects such as Petra Nova has heightened suspicion. Petra Nova is a CCS-equipped coal-fired power plant that closed in Texas last year. This $1 billion project received a grant of $195 million from the US government.

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Arenivas of Kinder Morgan also pointed out that there are delays in approving the new reservoir, saying that the Environmental Protection Agency may take up to five years to approve it.

He added that the “anti-pipeline movement” in the United States has Cheating Many oil and gas projects may pose a similar threat to new large-scale carbon dioxide pipelines.

Nevertheless, although Arrhenivas believes that his company will build more oil and gas infrastructure in the future, he said that eventually it will be “inevitable” to build more pipelines to transport carbon dioxide and hydrogen than fossil fuels. “I do believe it provides a huge growth story,” he said.

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