Caliche signs lease for subsurface carbon capturein Beaumont

Jishnu Nair | September 7, 2023 (Houston Business Journal) – A year after selling several storage assets in Beaumont, Texas, Houston-based CalicheDevelopment Partners II returned to strike a leasing deal with the city for carboncapture.

Caliche reached a deal to lease 4,000 contiguous acres near the source of one-third of theregion’s industrial emissions, the company said Sept. 6. Caliche’s early estimates showthe formations can store up to 30 million tonnes of carbon dioxide.

The company had been working with the city for about a year on the deal, Caliche CEODave Marchese said in an emailed statement to the Houston Business Journal. Houston-based engineers Geostock Sandia and GSI Environmental provided technical expertisefor the deal.

Caliche also hired a new director of energy transition, Graham Payne. Payne previouslyworked with oil fi eld services giant Schlumberger (NYSE: SLB) and in the Houston office of Batelle Memorial Institute. He will oversee permitting, geologic modeling and thedrilling and execution of subsurface storage for Caliche.

In March 2022, Caliche sold the ethylene and helium storage caverns it developed in atthe Spindletop Dome in Beaumont to Dallas-based Energy Transfer LP (NYSE: ET). Caliche built out 5 million barrels of ethylene storage and 3 million barrels of heliumstorage at the 53-acre site, which is permitted for up to 59 million barrels of storage total.

When asked about the possibility of the Beaumont carbon capture space being sold inthe future, Marchese told the HBJ the company planned as though it will own all of itsdeveloped assets.

"Caliche invests in long-term assets that sometimes make more sense to be owned bylarger companies," Marchese said. "We put safety, asset integrity and reliability at theforefront of our thinking and act as if we will be stewards of the assets we're building inthe distant future."

Caliche’s work in Beaumont is the latest development of carbon capture andsequestration in the Houston area and by Houston-area companies. OccidentalPetroleum Corp. (NYSE: OXY) has been prolifi c thanks in part to federal funding for itsplanned direct air capture hub in King Ranch, south of Corpus Christi, Texas. The U.S.Department of Energy granted Oxy $1.2 billion for its project, and the Houston-basedcompany is one of only two recipients of the grant.

Oxy subsidiary 1PointFive also recently broke ground on Stratos, billed as the world’slargest DAC plant, in the Permian Basin. The plant is expected to go online in 2025 withthe potential of capturing 1 million metric tonnes of CO2 after expansions.

Just last month,Oxy acquired a partner company, British Columbia-based CarbonEngineering Ltd., for $1.1 billion. Carbon Engineering developed the DAC technologyused in the Stratos and King Ranch projects.

Another recent carbon capture deal in the Houston area involves Exxon Mobil Corp.(NYSE: XOM), which agreed a deal to acquire Denbury Inc. (NYSE: DEN) for $4.9 billionto boost its Exxon Low Carbon Solutions business arm. The deal followed Exxon officially relocating its headquarters from Irving, Texas, to its 385-acre campus at CityPlace, the master-planned community formerly known as Springwoods Village.

Also changing hands is a stake in the Bayou Bend carbon capture and sequestrationproject on the Texas Gulf Coast. In late August, Denver-based Carbonvert sold all of its25% stake in the project to Norway-based Equinor ASA (NYSE: EQNR). Houston-basedTalos Energy Inc. (NYSE: TALO) and California-based Chevron Corp. (NYSE: CVX), whichhas a major presence in Houston, are the other two companies in the Bayou Bend CCSLLC joint venture.