Climate Startup Signs CO2 Deals With Three U.S. Oil Producers

Cuts to U.S. federal incentives for carbon capture projects and an uncertain regulatory environment going forward have prompted some start-ups to move from solely capturing and storing carbon dioxide to selling it to oil companies to help them boost oil recovery. Carbon management engineering company Spiritus, for example, has recently signed preliminary agreements with three U.S. oil and gas producers to sell them the captured CO2 for enhanced oil recovery (EOR). The injection of CO2 into reservoirs could help unlock an additional 70 million barrels of oil from wells in Texas, the Rockies, and the Midwest, the CEO of Spiritus, Charles Cadieu, told Bloomberg in an interview published on Wednesday. “The removal market is challenged right now,” Cadieu told Bloomberg, adding that “The pull is just great in the EOR space and that’s part of what it is to be a company: to go where the commercial traction is.” After an initial momentum of carbon capture technologies, including the still not-matured direct air capture, the economic and commercial feasibility of projects has worsened amid insufficient government support and high costs. In the U.S., the Trump Administration removed many projects from funding and the biggest buyers of carbon credits, such as the tech giants, have scaled back carbon credit purchases as they pursue investments in AI development.The challenging market for carbon removal has led some businesses to fold while others, including Spiritus, have pivoted to providing CO2 to boost oil recovery at U.S. producers. A University of Houston report from last month found that as many as 137 billion barrels of U.S. oil are technically recoverable using carbon dioxide-enhanced oil recovery (EOR). Texas and the U.S. Gulf Coast contain more than half of the U.S. oil resources considered technically favorable for this technology, according to the University of Houston white paper. “Injected CO2 works to revitalize mature oil fields by reducing oil viscosity, improving sweep efficiency and restoring reservoir pressure, resulting in incremental oil production beyond primary and secondary recovery,” the report reads. “CO2-EOR also supports permanent carbon storage and by virtue of this will produce uniquely low-carbon intensity oil for global markets.”By Charles Kennedy for Oilprice.comMore Top Reads From Oilprice.comAsia's Crude Imports Hit Highest Level Since the Iran War BeganHormuz Traffic Running 80% Below Its 10-Day AverageTotalEnergies to Develop Offshore Gas Field to Boost Nigeria LNG Supply