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Caliche joins growing list of Texas permits awaiting review for carbon sequestration

Houston – June 7, 2024 | Naomi Klinge (Houston Business Journal) – Houston-based Caliche Development Partners II CO2 Sequestration LLC is one step closer to storing carbon dioxide in Beaumont, Texas, for the first time.

Caliche has officially finished its completeness review of its permit application for three Class VI wells, which are dedicated to permanently storing carbon dioxide underground. The company is the latest to join the growing list of companies in Texas awaiting approval for their Class VI permits by the Environmental Protection Agency.

The completeness review, which is the first stage of the permit approval process, was completed in just 20 days, quicker than the estimated 30 days, which many permits far surpass.

“We went and specifically looked for someone with Graham [Payne’s] geotechnical experience and experience in CO2 sequestration to augment the team and to accelerate the application,” Caliche CEO Dave Marchese told the Houston Business Journal.

Payne joined Caliche as the director of energy transition in August 2023. He previously worked with oil field services giant Schlumberger Ltd. (NYSE: SLB) and in the Houston office of Battelle Memorial Institute. He oversees permitting, geologic modeling, and the drilling and execution of subsurface storage for Caliche.

The technical review, which is the next stage of the review process, is estimated to take 18 months, according to the EPA. But Payne hopes it will be done quicker, now that applications in Louisiana no longer go through the EPA since the state gained regulatory authority over the process.

Louisiana has been a hotspot for Class VI well applications, having 22 applications under review with the EPA by mid-November. In comparison, Texas had just six applications under review at the time.

But with Texas’s geology and proximity to industrial emissions, seven more projects have already submitted applications to the EPA in the state, bringing the total number to 13 awaiting review.

"The beginning parts of Texas projects getting into CCS are going to be a really, really exciting time,” Payne said. "There's going to be a lot of growth for growth. Especially around Beaumont, there are going to be a lot of other sequestration projects that are building up."

While Caliche is the latest to submit an application, Spring-based Exxon Mobil Corp.(NYSE: XOM) also submitted one on March 8 for a project titled the Rose Carbon Capture and Storage Project. Houston Business Journal has reached out to get more information on the project.

What is Caliche’s carbon capture project?

In September, Caliche announced it reached a deal to lease 4,000 acres of pore space that could store up to 30 million tonnes of carbon dioxide. The company said it had been working with the city of Beaumont for about a year on the deal.

Caliche’s project in Beaumont is complementary to its other underground storage systems in the area, which store natural gas in salt caverns.

For its carbon dioxide sequestration, Marchese said the company is targeting mid-sized companies that emit about 500,000 tonnes to 1.5 million tonnes of carbon dioxide per year, since they are less likely to have the capabilities to develop their own carbon sequestration projects.

Although it has been tough for emitters and sequestration companies to coordinate contracts before infrastructure is developed, Marchese said new tax credits that support carbon capture are helping progress conversations.

“It’s a coordination and precedent problem, in that it does take time and effort and capital to get to this point where you've applied for your Class VI permit, and then going through the permitting process all the way to where we could actually start drilling wells, building pipelines and sequestering CO2,” Marchese said.

“The emitters need a little more certainty on our side of the project before they can commit to their capture portion of the project. So I think this clarity that we're getting around the permitting of this project helps us and the emitters narrow down the target dates of when this might go into service, and hopefully that will help them commit to their projects and then commit to tonnes that we could sequester.”

Marchese added that the company is exploring potential for hydrogen storage as well. In March 2022, Caliche sold the ethylene and helium storage caverns it developed in at the 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 helium storage at the 53-acre site, which is permitted for up to 59 million barrels of storage total.

Finance Contact: David Saindon – dsaindon@calichestorage.com
Media Contact: Emily C. Walsh – emilycampagnawalsh@gmail.com

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